Ferrero to buy cereal maker WK Kellogg for $3.1 billion; Kellogg shares jump 30%

Chocolate maker Ferrero has agreed to buy cereal giant WK Kellogg in a deal valued at $3.1 billion, the companies announced Thursday.

Shares of WK Kellogg soared 30% in premarket trading on the announcement. Excluding Thursday’s stock move, shares have fallen more than 2% this year, dragging the company’s market value down to about $1.5 billion. The $23 per-share purchase price represents a 31% premium above the stock’s closing price on Wednesday.

The deal is expected to close in the latter half of the year, pending approval from shareholders and regulators.

WK Kellogg, which makes U.S. childhood staples such as Froot Loops and Frosted Flakes, spun off into a standalone company in 2023 as Kellogg sought to focus more on its growing snack business and divest from the sleepy cereal category. Kellogg renamed itself to Kellanova, which now houses snack brands such as Pringles and Cheez-It. M&M owner Mars agreed to buy Kellanova for $36 billion last year in a deal that has not yet closed.

A Ferrero acquisition of WK Kellogg adds to consolidation in packaged foods. Many American consumers have shunned sugary cereals in favor of breakfast options considered healthier, and other shoppers moved to private label brands after inflation spiked in recent years.

The move deepens Ferrero’s ambitions in the U.S. market. The Italian family-owned company has been on a North American buying spree in recent years, snapping up Nestle’s U.S. candy business and Halo Top owner Wells Enterprises, among others.

The third-largest U.S. candy company in May announced a new slate of products to appeal to American consumers, including peanut Nutella and Dr Pepper Tic Tacs.

“Over recent years, Ferrero has expanded its presence in North America, bringing together our well-known brands from around the world with local jewels rooted in the U.S.,” Ferrero Group executive chair Giovanni Ferrero said in a statement. “Today’s news is a key milestone in that journey, giving us confidence in the opportunities ahead.”

WK Kellogg is expected to report its quarterly results on Aug. 5, but the company won’t hold a conference call, citing the pending deal. According to its preliminary results, also announced on Thursday, the company is projecting net sales in the range of $610 million to $615 million and adjusted earnings before interest, taxes, depreciation and amortization between $43 million and $48 million.