Kellogg CEO Steve Cahillane

Following similar moves by its packaged foods competitors, Kellogg Co. (K - Get Report) announced Friday, Oct. 6, that it will pay $600 million for Chicago Bar Co. LLC, the maker of Rxbar protein bars.

The deal is valued at $400 million net of tax benefits, Kellogg said in a statement. Rxbar expects to generate net sales of $120 million in fiscal 2017. Including tax benefits, the price tag is about 12 to 14 times Rxbar's projected 2018 Ebitda.

The company makes distinctively packaged "clean-label" protein bars, with about 220 calories and 12 grams of protein. It will operate independently as a standalone business within Kellogg.

"Adding a pioneer in clean-label, high-protein snacking to our portfolio bolsters our already strong wholesome snacks offering," Kellogg CEO Steve Cahillane said in a statement. "With its strong millennial consumption and diversified channel presence including e-commerce, Rxbar is perfectly positioned to perform well against future food trends."

Protein bars are a popular category, with General Mills Inc. (GIS - Get Report) acquiring Epic Provisions LLC for what sources said was $100 million last year and its venture unit, 301 Inc., joining 2x Consumer Products Growth Partners in backing low-sugar, protein barmaker D's Naturals LLC on Feb. 28.

A Kellogg spokeswoman said in an email that Kellogg plans "on helping to accelerate the brand's continued growth by providing the tools and resources to scale the brand even faster than it is today" and does not intend to make any personnel changes.

Piper Jaffray & Co. provided financial advice to Rxbar, which retained a Giannuzzi Group LLP team led by Nick Giannuzzi for legal advice. 

Kellogg tapped a Kirkland & Ellis LLP team of Keith Crow, Theodore Peto and Adam Clifford as its outside counsel.

It's Cahillane's first week on the job: he became Kellogg's first outside CEO since 1999 on Oct. 2. His predecessor, John Bryant, is the latest in a wave of executive departures at Big Food companies, including Muhtar Kent of Coca-Cola Co. (KO - Get Report) , Ken Powell of General Mills and Irene Rosenfeld of Mondelez International Inc. (MDLZ - Get Report) . The companies have struggled with lower sales volumes, diminishing shelf space, increasing private label penetration, pricing pressure and low barriers to entry for upstart competitors. Major food company dollar sales have declined almost 3% this year, according to Goldman Sachs analyst Jason English.

Battle Creek, Mich.-based Kellogg is not immune: its sales fell 5% in September, according to IRI data, and its shares are down 14.5% year to date, while the S&P 500 has increased 14% during that period.

These competitors have snapped up niche health-focused brands to keep up with changing customer tastes. Post Holdings Inc. (POST - Get Report) acquired healthy British cereal maker Weetabix Ltd. from China's Bright Food Group Co. Ltd. and Baring Private Equity Asia for £1.4 billion ($1.8 billion).

Campbell Soup Co. (CPB - Get Report) , for instance, agreed to pay $700 million for Pacific Foods of Oregon Inc. in July, although the pending acquisition hit a snag when the estate of the target's former shareholder sued the company.

Last month, Conagra Brands Inc. (CAG - Get Report) acquired private equity-backed ready-to-eat popcorn maker Angie's Artisan Treats LLC, a month after Mars Inc. picked up natural ready-to-eat Indian food products maker.

Nestle SA, under activist pressure, plans to exit its U.S. confectionery business and last month bought coffee chain Blue Bottle Coffee Inc. and plant-based foods maker Sweet Earth Inc.

Valuations are commensurately high: McCormick & Co. (MKC - Get Report) , for instance, paid just under 20 times Ebitda for Reckitt Benckiser Group plc's food division. The $4.2 billion deal closed Aug. 17.

Cahillane, a former Coca-Cola executive, previously served as CEO of vitamin maker Nature's Bounty Co., which Carlyle Group LP (CG - Get Report) sold to KKR & Co. LP (KKR - Get Report) in July, seven years after taking the company private for $4 billion.

The Rxbar acquisition is Kellogg's first acquisition in a year, following its 1.38 billion reais (about $439 million) purchase of Brazilian food company Ritmo Investimentos SA on Oct. 13. Excluding the tax benefits, it's Kellogg's largest deal since 2012, when it acquired the Pringles chips brand from Procter & Gamble Co. (PG - Get Report) for $2.7 billion.

The deal is expected to close by the end of the year.

Rxbar did not respond to requests for comment.

Kellogg shares rose 0.5% to $63.02 in Friday morning trading.

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Editors' pick: Originally published Oct. 6.