Nutella-maker Ferrero to buy Kellogg's business for $3.1 billion
WK Kellogg's shares were up 31% in morning trading on Thursday.
WK Kellogg's brands have been struggling with a long-term decline in US cereal consumption as consumers turned to protein bars, shakes and other breakfast items. Cereal sales got a bump during the pandemic as more families stayed home, but sales continued to decline after the pandemic eased.
Nutella-maker Ferrero to buy Kellogg's biz for $3.1 billion
Ferrero, the Italian candy maker, has agreed to acquire WK Kellogg, the American cereal giant, in a deal valued at $3.1 billion, the companies announced on Thursday.
The takeover would combine Ferrero, a family-owned company that makes Tic Tacs, Ferrero Rocher candies and Nutella spreads, with the producer of Frosted Flakes, Froot Loops, Rice Krispies and other cereals. It represents Ferrero's latest push to grow its business in North America. Shares of WK Kellogg surged 30% in early trading, rising to just below the acquisition price agreed to by the companies.
Merger activity in the food sector has been slow this year as US President
Donald Trump
's volatile trade policy has created uncertainty for company executives and unsettled consumers, investment banking firm Capstone Partners said.
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Shoppers, faced with nearly two years of price increases for cereals, snacks and other foods at grocery stores, have either cut back or switched to less expensive, private-label store brands.
WK Kellogg reported a slump in sales in its first quarter this year because of the "weaker than expected consumption trends". The company said that sales for the full year would be lower than previously expected, falling as much as 3%.
The combination with Ferrero would give WK Kellogg "greater resources and more flexibility to grow our iconic brands in this competitive and dynamic market", WK Kellogg CEO Gary Pilnick said.
WK Kellogg was created in 2023 when the Kellogg Company spun it off as an independent company. The larger remaining business, which focused on snacks like Pringles and Cheez-It, was renamed Kellanova.
Mars, the company behind M&M's and Snickers, agreed last year to acquire Kellanova in a deal valued at $35.9 billion.
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