Moody's downgrades Kellogg

Moody's Investors Service said it lowered the long-term senior unsecured debt ratings of Kellogg Co. and its subsidiaries to Baa1 from A3 following news that it agreed to acquire Proctor & Gamble's Pringles business for about $2.7 billion in cash.

The outlook is negative.

This rating action concludes a review for possible downgrade that began in November 2011, Moody's said.

Kellogg's prime-2 short-term rating, which was not under review, is affirmed.

The downgrade reflects the higher pro forma leverage and execution risk resulting from the proposed Pringles acquisition and the ongoing challenges in Kellogg's core operations related to inefficiencies in its supply chain and soft performance in its flagship cereal business, the agency said.

The ratings are supported by its strong brand portfolio and its leading global shares in cereals and savory snacks, Moody's said.

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