Ferrero, the Italian confectionery giant known for Nutella and Kinder, is acquiring U.S.-based WK Kellogg for approximately $3.1 billion, aiming to strengthen its presence in North America. The deal values each Kellogg share at $23 and includes control over the company’s cereal production, marketing, and distribution in the U.S., Canada, and the Caribbean.
Following the announcement, WK Kellogg shares surged by 31% in Thursday morning trading.
WK Kellogg traces its roots back to 1906 in Battle Creek, Michigan, where founder W.K. Kellogg unintentionally created flaked cereal during a granola experiment. Today, the company produces household-name cereals such as Corn Flakes, Froot Loops, Special K, Frosted Flakes, and Rice Krispies.
In 2023, Kellogg reorganized, spinning off its snack brands—like Cheez-Its and Pringles—into a separate company, Kellanova. Mars Inc., maker of M&M’s, revealed plans last year to acquire Kellanova in a nearly $30 billion deal.
Ferrero, established in 1946, has been actively growing its U.S. footprint. It purchased Nestlé’s U.S. candy brands in 2018, including Butterfinger, Nerds, and SweeTarts, and acquired ice cream maker Wells Enterprises in 2022, known for Blue Bunny and Halo Top.
Despite its iconic status, WK Kellogg has faced challenges amid a long-term drop in cereal consumption in the U.S. Many consumers have shifted toward protein bars, shakes, and other alternatives. Although cereal sales temporarily rose during the pandemic, they declined again once normal routines resumed. As of early July, U.S. cold cereal sales were down 6% compared to the same time in 2022.
Brad Haller, a mergers and acquisitions expert at West Monroe, noted that Kellogg’s extensive distribution network and retail relationships make it a valuable asset for Ferrero, helping the company secure better pricing and shelf placement. The acquisition also allows Ferrero to diversify beyond snacks and sweets into meal categories.
However, Haller also suggested Ferrero may take a hard look at the cereal brands and could potentially cut underperforming lines or close manufacturing facilities, noting that European buyers might not share the same emotional connection Americans have with the brands.
WK Kellogg has also dealt with labor issues, including a major strike in late 2021 that disrupted production. Additionally, the company has faced public pressure over the use of artificial dyes in its cereals. Earlier this year, it committed to removing artificial dyes from products sold in schools and to exclude them from any new products starting January.
The deal still requires approval from WK Kellogg shareholders and is expected to close in the second half of the year. Afterward, the company will become a subsidiary of Ferrero and its stock will be delisted from the New York Stock Exchange.
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