Prime Highlights
- Ferrero reveals $3.1 billion WK Kellogg breakfast cereal maker takeover agreement.
- The deal will allow Ferrero to boost its presence in the North American breakfast sector.
Key Fact
- WK Kellogg investors will get $23 a share—a 31% premium.
- The deal is expected to be completed by the second half of 2025, pending regulatory approvals.
Key Background
Ferrero Group, the world confectionery leader that owns Ferrero Rocher, Kinder, and Nutella among others, has entered into an agreement to buy WK Kellogg Co. in a $3.1 billion deal. The cash transaction based on a offer price of $23 per share will put Ferrero in a good position to expand its presence in North America substantially. The agreement provides rights to produce and distribute a portfolio of famous brands of cereals in the Caribbean, Canada, and U.S.
WK Kellogg, which was spun off from Kellogg Co. in 2023, kept the North American cereal business and global snacks business, now Kellanova. In spite of aggressive competition and falling U.S. use of breakfast cereal, WK Kellogg still has such legendary brands as Frosted Flakes, Froot Loops, Special K, and Raisin Bran. The deal is Ferrero’s fourth big foray into the breakfast food market, having already diversified the business beyond confectionery.
Ferrero has been on its toes expanding its U.S. business through recent strategic acquisitions, including Nestlé’s U.S. confectionery unit and Wells Enterprises. The acquisition will help Ferrero achieve scale, extract economies from WK Kellogg’s six-plant manufacturing platform and benefit from long-established brand equity. The two companies envision huge potential for innovation and operational synergies, especially in a category that has defied changing consumer trends.
WK Kellogg’s board of directors sanctioned the deal unanimously, and incumbent shareholders holding 21.7% of the company have already subscribed to the offer. WK Kellogg will be a private subsidiary company of Ferrero on completion and will have its stock exchange listing cancelled. The deal is predicted to finish towards the end of the year 2025, contingent upon shareholder approval and regulatory approvals.
