WK Kellogg on Thursday agreed to be bought by the owner of Ferrero Rocher in a deal worth around $3.1bn, as the cereal maker has been struggling with weakening consumer demand due to persistently high inflation.
Deal making in the snacking space has picked up pace as food brands battle muted sales in the wake of price hikes owing to higher input costs and a shift in consumer preference for healthier options.
Ferrero has offered WK Kellogg’s shareholders $23 per share, representing a 31% premium to the stock’s close on Wednesday. Shares of the cereal maker were up 30% at $22.70 in premarket trading on Thursday.
The deal, which is Ferrero’s biggest acquisition in recent years, brings legacy brands such as Nutella, Kinder, Tic Tac, Frosted Flakes, Froot Loops and Special K under one roof.
Late on Wednesday, a source told Reuters that the candy maker behind Nutella was nearing a deal to buy WK Kellogg.
At the time, Jefferies analysts said that the magnitude of the premium was a surprise and would make it hard to envision another bidder coming forward or a deal rejection.
WK Kellogg was spun off from Kellanova and holds the North American cereal business of Kellogg, the original parent. Meanwhile, Cheez-It maker Kellanova is in the process of being acquired by candy giant Mars in a nearly $36bn deal.
WK Kellogg and other packaged food companies have flagged subdued demand due to cautious consumer spending in the US following consistent price increases by firms trying to navigate higher input costs.
Packaged food makers are also under pressure from health hecretary Robert F Kennedy Jr’s “Make America healthy again” commission to eliminate the use of synthetic dyes.
The maker of Nutella hazelnut spread, Ferrero, has turned into a global group, boosted by the aggressive acquisition campaign launched by its executive chair Giovanni Ferrero.
In 2018, Ferrero bought Nestlé’s US confectionery business for $2.8bn. The group reported a turnover of €18.4bn ($19.2bn) in the financial year ending on 31 August and said it had increased its investments to boost manufacturing capabilities and expand across categories.
The transaction is expected to close in the second half of 2025.
