Latest news with #WK Kellogg
Reuters
15-07-2025
- Business
- Reuters
Ferrero poised to revive WK Kellogg sales for health-conscious Americans
July 15 (Reuters) - Nutella spread maker Ferrero, armed with experience in health-regulated European markets and a track record of revamping struggling brands like Keebler cookies, has a good chance of reviving WK Kellogg's (KLG.N), opens new tab legacy cereal brands with its $3.1 billion take-private deal announced last week. Ferrero, which makes sugary treats like Kinder chocolate eggs, Ferrero Rocher, and Tic Tac, has pursued an aggressive global expansion to boost revenue and diversify its portfolio beyond sweets into snacks, baked goods, and now breakfast cereals. Under Chairman Giovanni Ferrero, the company has invested heavily in product innovation, reformulation and packaging redesign to turn around some challenged brands it previously acquired such as Keebler from Kellogg. Meanwhile, demand has fallen for products made by WK Kellogg (KLG.N), opens new tab, whose cereals include Special K, Corn Flakes and sweetened offerings such as Froot Loops, Honey Smacks and Frosted Flakes. Consumers have traded down from its pricier cereals even as Kellogg has come under scrutiny for using artificial food dyes. "Ferrero's creativity can help jump-start sales in a sleepy (albeit higher margin) category," said Hank Cardello, executive-in-residence at the Business for Impact center at Georgetown's McDonough School of Business. Ferrero's expertise in cookies and confectionery could help create distinct new versions of cereal products, he added. Ferrero could reinvigorate WK Kellogg's portfolio which also contains healthier options such as Special K and Raisin Bran, touted for their high fiber content, as well as nutrient-rich cereals, granola and waffles under its Kashi brand. "I expect that (Ferrero) will preserve Kellogg brand recognition without too much dilution while also marketing a healthier and more consumer-friendly and appealing product line," Amrita Bhasin, CEO of logistics food and beverage company Sotira, said. In 2018, Ferrero bought Nestle's confectionery business for $2.8 billion, adding brands such as candy bars Butterfinger, Baby Ruth, and 100 Grand to its portfolio. In just a few years, Ferrero relaunched Butterfinger with higher-quality ingredients including peanuts, cocoa and milk and revamped packaging. The steps helped grow demand for the salted caramel bars. In 2019, Ferrero made a $1.3 billion acquisition of Kellogg's cookies, snacks and ice cream business. The Italian company revitalized these products by investing in new packaging and more marketing. In 2023, it also bought Fresystem Group and used the acquisition to grow its frozen food business and launch Nutella muffins and other baked goods. Ferrero declined to comment on the strategy for WK Kellogg. In April, WK Kellogg said, opens new tab it was reformulating its cereals served in schools to not include artificial dyes. Other packaged food makers such as PepsiCo (PEP.O), opens new tab, Kraft Heinz (KHC.O), opens new tab and Hershey (HSY.N), opens new tab have also started working to remove synthetic food dyes from their products, under pressure from U.S. Health Secretary Robert F. Kennedy Jr.'s Make America Healthy Again, or MAHA campaign. Analysts and industry experts noted that Ferrero has spent decades dealing with European regulators that have pushed back on additives, coloring and sugar. This could give the confectionery giant an edge dealing with Kennedy's MAHA campaign, they said. "Ferrero has been a pioneer in marketing smaller portions, which would fit in well with MAHA," Cardello said. For instance, as a founding member of the Always a Treat initiative in 2017, Ferrero committed to ensuring that half of its single-serve packs contain 200 calories or less to help consumers manage their sugar intake. As a private family-owned company, Ferrero is insulated from the pressures of quarterly earnings, giving it more flexibility to invest in long-term brand building and product innovation. Analysts said this could be critical in reshaping WK Kellogg's product lineup over the next few years. Still, MAHA could boost costs for Ferrero as it makes its expansion push in North America. "Ferrero will have to grapple with MAHA requirements across the company, not just in cereal, since much of its business is based on candy and sugary snack foods," said Sky Canaves, an analyst with market research firm Emarketer.
Yahoo
15-07-2025
- Business
- Yahoo
Analysis-Ferrero poised to revive WK Kellogg sales for health-conscious Americans
By Savyata Mishra (Reuters) - Nutella spread maker Ferrero, armed with experience in health-regulated European markets and a track record of revamping struggling brands like Keebler cookies, has a good chance of reviving WK Kellogg's legacy cereal brands with its $3.1 billion take-private deal announced last week. Ferrero, which makes sugary treats like Kinder chocolate eggs, Ferrero Rocher, and Tic Tac, has pursued an aggressive global expansion to boost revenue and diversify its portfolio beyond sweets into snacks, baked goods, and now breakfast cereals. Under Chairman Giovanni Ferrero, the company has invested heavily in product innovation, reformulation and packaging redesign to turn around some challenged brands it previously acquired such as Keebler from Kellogg. Meanwhile, demand has fallen for products made by WK Kellogg, whose cereals include Special K, Corn Flakes and sweetened offerings such as Froot Loops, Honey Smacks and Frosted Flakes. Consumers have traded down from its pricier cereals even as Kellogg has come under scrutiny for using artificial food dyes. "Ferrero's creativity can help jump-start sales in a sleepy (albeit higher margin) category," said Hank Cardello, executive-in-residence at the Business for Impact center at Georgetown's McDonough School of Business. Ferrero's expertise in cookies and confectionery could help create distinct new versions of cereal products, he added. Ferrero could reinvigorate WK Kellogg's portfolio which also contains healthier options such as Special K and Raisin Bran, touted for their high fiber content, as well as nutrient-rich cereals, granola and waffles under its Kashi brand. "I expect that (Ferrero) will preserve Kellogg brand recognition without too much dilution while also marketing a healthier and more consumer-friendly and appealing product line," Amrita Bhasin, CEO of logistics food and beverage company Sotira, said. In 2018, Ferrero bought Nestle's confectionery business for $2.8 billion, adding brands such as candy bars Butterfinger, Baby Ruth, and 100 Grand to its portfolio. In just a few years, Ferrero relaunched Butterfinger with higher-quality ingredients including peanuts, cocoa and milk and revamped packaging. The steps helped grow demand for the salted caramel bars. In 2019, Ferrero made a $1.3 billion acquisition of Kellogg's cookies, snacks and ice cream business. The Italian company revitalized these products by investing in new packaging and more marketing. In 2023, it also bought Fresystem Group and used the acquisition to grow its frozen food business and launch Nutella muffins and other baked goods. Ferrero declined to comment on the strategy for WK Kellogg. In April, WK Kellogg said it was reformulating its cereals served in schools to not include artificial dyes. Other packaged food makers such as PepsiCo, Kraft Heinz and Hershey have also started working to remove synthetic food dyes from their products, under pressure from U.S. Health Secretary Robert F. Kennedy Jr.'s Make America Healthy Again, or MAHA campaign. Analysts and industry experts noted that Ferrero has spent decades dealing with European regulators that have pushed back on additives, coloring and sugar. This could give the confectionery giant an edge dealing with Kennedy's MAHA campaign, they said. "Ferrero has been a pioneer in marketing smaller portions, which would fit in well with MAHA," Cardello said. For instance, as a founding member of the Always a Treat initiative in 2017, Ferrero committed to ensuring that half of its single-serve packs contain 200 calories or less to help consumers manage their sugar intake. As a private family-owned company, Ferrero is insulated from the pressures of quarterly earnings, giving it more flexibility to invest in long-term brand building and product innovation. Analysts said this could be critical in reshaping WK Kellogg's product lineup over the next few years. Still, MAHA could boost costs for Ferrero as it makes its expansion push in North America. "Ferrero will have to grapple with MAHA requirements across the company, not just in cereal, since much of its business is based on candy and sugary snack foods," said Sky Canaves, an analyst with market research firm Emarketer.
Yahoo
12-07-2025
- Business
- Yahoo
Ferrero Puts Snap, Crackle and Pop into Its Earnings With WK Kellogg Acquisition
Nutella-covered Froot Loops could become a thing now that Ferrero's buying WK Kellogg for $3.1 billion. The Rice Krispies-maker's shares did 'Gr-r-r-eat' yesterday, popping 30% as investors backed the Italy-founded company's takeover of American breakfasts. Ferrero previously bought Nestlé's US candy biz for $2.8 billion, as well as chocolate-maker Fannie May and RedHots owner Ferrara — considering the name, it was inevitable. The Italian company is now the US's third-largest candy seller, behind Hershey and Mars, according to Evercore ISI. Ferrero has also brought over brands that Americans used to visit the EU to buy (Kinder Bueno, Joy Eggs) and Americanized a couple of its products: Dr Pepper Tic Tacs and Nutella Peanut. READ ALSO: Delta Air Lines Projects Clearer Skies Ahead and Pentagon to Take $400 Million Stake in Rare Earth Miner Outside Vegas Sugary cereals never left the '90s as shoppers switched to healthier and higher-protein breakfast options with fewer artificial food dyes. And in recent years, inflation has pushed cereal buyers to opt for more affordable private-label brands (Shredded Wheat instead of Mini-Wheats). WK Kellogg reported that its sales fell 6% in the first quarter and cut its annual guidance, citing 'weaker than expected consumption trends.' The company has been going soggy for a while: In 2023, Kellogg spun off its struggling cereal biz as WK Kellogg and renamed itself Kellanova to focus on its snack portfolio (Pringles, Cheez-Its). Though both companies have struggled with scrimping shoppers, Kellanova's sales weren't hit as hard as WK Kellogg's last quarter. Ferrero's competitor Mars is betting on snacks over cereal. Mars announced in August that it'll buy Kellanova for $36 billion, and the deal was approved by the FTC last month — it's still facing antitrust scrutiny in the EU. Experts don't think regulators will challenge Ferrero's deal since it's significantly smaller, and Ferrero isn't a major player in the cereal aisle. Milking It: The campaign to get Americans to eat more cereal is underway. WK Kellogg CEO Gary Pilnick encouraged Americans to eat cereal for dinner last year (the comment caused some PR drama), citing company data showing a quarter of consumers already eat cereal outside of breakfast time. WK Kellogg's has also tried turning its cereals into snacks, launching grab-and-go bags of brands like Froot Loops and Apple Jacks as well as cereal bars. This post first appeared on The Daily Upside. To receive delivering razor sharp analysis and perspective on all things finance, economics, and markets, subscribe to our free The Daily Upside newsletter.
Yahoo
11-07-2025
- Business
- Yahoo
Kraft Heinz Stock Rises After Report of a Possible Break-Up
Kraft Heinz is planning a break-up, according to a report, a move that could undo a massive merger just a decade old. The company is one of the world's leading food makers, known for brands like Philadelphia cream cheese, Cool Whip, Maxwell House coffee and Stove Top stuffing. It could spin off part of its grocery business, The Wall Street Journal wrote Friday, citing people familiar with the matter, with a move possible within weeks. Shares of Kraft Heinz (KHC), which were down more than 11% this year through Thursday's close above $26, were recently up nearly 2%. The company's market value is above $31 billion, according to Visible Alpha data. The company said in May that deals were on the table. Wall Street analysts have an average price target of near $28 on Kraft Heinz stock, according to Visible Alpha. Today's news follows another big food deal from earlier in the week. WK Kellogg (KLG) on Thursday said it agreed to be acquired by Italian sweets company The Ferrero Group,. Read the original article on Investopedia
Forbes
11-07-2025
- Business
- Forbes
Kellogg's Stock Explodes On M&A Talk—Too Late To Buy?
Photo byWK Kellogg Co. (NYSE: KLG) jumped nearly 30% on July 10 following the announcement from Italian food leader Ferrero regarding a $3.1 billion acquisition, inclusive of debt. This all-cash transaction values WK Kellogg at $23 per share, representing an almost 40% premium over the 30-day volume-weighted average trading price, and is anticipated to finalize in the second half of 2025, subject to regulatory approvals. Ferrero, renowned for brands such as Nutella, Ferrero Rocher, Kinder, and Tic Tac, is broadening its U.S. presence with this strategy, incorporating iconic cereal brands like Frosted Flakes and Froot Loops into its expanding packaged food portfolio. With shares currently trading close to the offer price, the pivotal question is whether there is any remaining value or if the buyout excitement has already placed a ceiling on future gains. For investors looking for less volatility than individual stocks, the Trefis High-Quality portfolio provides an alternative, having surpassed the S&P 500 and yielding returns exceeding 91% since its inception. Additionally, check Down 30%, What's Next For BG's Stock? Spun off from Kellanova in October 2023, WK Kellogg entered the market with a lineup of recognizable cereals but lacked growth momentum. Sales have decreased at an average annual rate of 3.1% over the previous three years, including a 6.2% decline year-over-year to $663 million in the latest quarter. Margins remain narrow, with a 5.6% operating margin across the last four quarters and a 2.1% net margin, indicative of weak pricing power in a mature product category. Nonetheless, the brand equity was irrefutable. For Ferrero, which has previously acquired Nestlé's U.S. candy division, Fox's Biscuits, and Wells Enterprises, adding a U.S. breakfast staple aligns with a broader strategy to diversify beyond confectionery. The acquisition establishes a presence in the $20B U.S. cereal market and sets Ferrero up for additional cross-category growth. Is it Still Undervalued? Prior to the acquisition, WK Kellogg's market capitalization was around $1.5 billion, rendering Ferrero's offer a near 100% premium. Comparatively, KLG was inexpensive: trading at merely 0.6x sales and 26.7x earnings, both below historical averages and indicative of skepticism regarding growth. Now, with shares around $23, the implied P/E ratio has escalated into the mid-30s, indicating limited potential for further revaluation. A Smarter Way to Approach the Market? Although a single-stock wager on KLG might not present significant upside anymore, broader access to quality companies can still offer returns. The Trefis High Quality (HQ) Portfolio, which contains 30 stocks, has consistently demonstrated superior performance compared to the S&P 500 over the last four years. What accounts for this? Collectively, HQ Portfolio stocks have yielded better returns with lower risk when compared to the benchmark index, resulting in a steadier ride, as illustrated in HQ Portfolio performance metrics. Invest with Trefis Market-Beating Portfolios See all Trefis Price Estimates
