Ferrero announced on 10 July that an agreement had been reached with the US Kellogg’s cereal maker, with the deal valuing WK Kellogg at $23.00 per share in cash.
This represents a 40% premium to the 30-day volume weighted average trading price of WK Kellogg.
The deal has been unanimously approved by the WK Kellogg board, but remains subject to approval by shareholders and regulators. It is expected to close in the second half of 2025.
Upon the completion of the transaction, WK Kellogg shares will no longer trade on the New York Stock Exchange, and the company will become a wholly owned subsidiary of Ferrero.
The WK Kellogg portfolio includes Kellogg’s Corn Flakes, Rice Krispies and Froot Loops, while it operates across the United States, Canada and the Caribbean.
Commenting on the announcement, Ferrero Group executive chair Giovanni Ferrero called the deal “more than just an acquisition”.
“[The agreement] represents the coming together of two companies, each with a proud legacy and generations of loyal consumers,” Ferrero said.
“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. Today’s news is a key milestone in that journey, giving us confidence in the opportunities ahead.”
Ferrero owns brands such as Ferrero Rocher and Nutella. Headquartered in Alba, the privately owned company is present in more than 50 countries with 37 production plants around the world.
Meanwhile, the Kellogg company was split into three separate businesses in 2023, with the global snacking division now known as Kellanova and the North American cereal business known as WK Kellogg. Its plant-based division was also spun off as a separate entity.
“We believe this proposed transaction maximizes value for our shareowners and enables WK Kellogg Co to write the next chapter of our company’s storied legacy,” added Gary Pilnick, chair and CEO of WK Kellogg.
“Since becoming an independent public company in October 2023, we have made excellent progress on our journey to become a more focused and more profitable business – driven by our tremendous people and a winning culture – all while building a strong foundation for future growth.
“Joining Ferrero will provide WK Kellogg Co with greater resources and more flexibility to grow our iconic brands in this competitive and dynamic market.”
Kellanova has also been subject to interest since the split of Kellogg’s in 2022, with the firm accepting a £28 billion bid from Mars in August of last year. However, that deal is subject to a US antitrust investigation.
Reacting to the news, Mark Field, the CEO Prof Consulting Group, described the move as “really interesting”.
“At this scale there will be efficiencies through structure, marketing spend, potentially central resources and procurement,” Field said.
“However the big wins seem to be Ferraro diversifying from confectionery and positioning themselves as a leading CPG business in addition to unlocking value through WF Kellogg established client base, particularly in the US.
“On a wider viewpoint, it’s noticeable that some of the recent deals are about multiple solid groups coming together for greater growth, rather than poorly performing businesses being rescued through acquisition.”
Food sector analyst and director at law firm Wilkin Chapman Rollits, Julian Wild, noted that the deal may be related to the recent “sluggish” performance of WK Kellogg.
“This is an interesting diversification for Ferrero, looking to broaden its traditional confectionery and biscuit business into North American breakfast cereals and bring several legacy brands under one roof,” Wild told Food Manufacture.
“What is clear is that WK Kellogg has performed sluggishly of late, indicating that the North American breakfast market is declining in favour of perceived healthier products.
“It’s an important indicator that the pace of M&A is picking up and that Ferrero see this as a useful platform for their broader ambitions.
“$3.1bn looks to be a very full price to take out an underperforming business, but Ferrero are determined competitors with big ambitions. They should do very well.”
In other news, Asda has proposed further redundancies as part of a move to combine managerial roles into newly created positions.
