Ferrero has confirmed its acquisition of WK Kellogg’s US-based breakfast cereal business for $3.1 billion.
This purchase price exceeds the $3 billion speculated yesterday in media reports quoting anonymous sources about an imminent deal.
In a statement, Ferrero announced that the takeover of WK Kellogg, established at $23 per share, is anticipated to close in the current second half and remains subject to regulatory approvals and shareholder clearance from the North American cereal manufacturer.
The Italy-based producer of Ferrero Rocher and Nutella highlighted that the transaction encompasses WK Kellogg’s “renowned beloved brands” in the US, Canada, and the Caribbean, including Froot Loops, Special K, Rice Krispies, and Raisin Bran.
Giovanni Ferrero, executive chairman of the privately held company, stated: “This is more than just an acquisition – it represents the coming together of two companies, each with a proud legacy and generations of loyal consumers.”
Ferrero has expanded its North American presence in recent years, integrating well-known global brands with locally entrenched favorites.
Notably, Ferrero has executed deals with US ice cream maker Wells Enterprises and the UK’s Burton’s Biscuit Company.
Moreover, the company has strategically utilized mergers and acquisitions to solidify its position in the US market. Earlier this year, it acquired protein snacks maker Power Crunch in California, building on the 2024 deal for the US-based biscotti business, Nonni’s Bakery. Financial terms for these transactions have not been disclosed.
WK Kellogg was spun off from the parent Kellogg in 2023, creating independent public companies. The company is currently led by Kellogg executive Gary Pilnick, who serves as chairman and CEO.
The other segment of Kellogg, Kellanova, focuses on the remaining global cereal business and snacks like Pringles. Kellanova is currently undergoing a $36 billion takeover by privately owned confectioner Mars, finalized last August.
Pilnick remarked in today’s statement: “We believe this proposed transaction maximizes value for our shareholders and enables WK Kellogg Co. to write the next chapter of our company’s storied legacy.” He added that joining Ferrero will provide greater resources and flexibility for WK Kellogg Co. to enhance its iconic brands amid a dynamic market.
Following the transaction, WK Kellogg will continue to operate from its Battle Creek, Michigan headquarters, which will serve as Ferrero’s base for North American breakfast cereals. Additionally, WK Kellogg will be delisted from the New York Stock Exchange post-acquisition.
Shares of the cereal business surged 30% to $22.84 by 3:02 PM BST in London, following yesterday’s speculation regarding the deal.
In its first full year since the spin-off, WK Kellogg’s annual results released in February indicated that sales and profits faced pressure in 2024. Reported sales fell 2% to $2.71 billion, while adjusted sales decreased by 1.1%. EBITDA declined by 12.7% to $193 million. However, on an adjusted and standalone basis, EBITDA increased by 3% and 6.6%, respectively, to $275 million.
Nonetheless, net income plummeted 34.5% to $72 million and was down 9.1% adjusted to $149 million. Diluted EPS fell from $1.28 a year earlier to $0.82.
In contrast, Ferrero, which also owns the Keebler brand, reported a turnover of €18.4 billion ($21.5 billion) for the year ending 31 August, reflecting an 8.9% increase.
The company comprises 37 production plants and employs 47,000 people worldwide. Recently, Ferrero noted that in North America, it employs over 14,000 staff across 22 facilities and 11 offices.
Lapo Civiletti, the CEO of Ferrero, asserted that the transaction with WK Kellogg “marks an important step towards expanding Ferrero’s presence across more consumption occasions and reinforces our commitment to delivering value to consumers in North America.”
As it approaches its second-quarter results scheduled on 5 August, WK Kellogg has provided preliminary figures. For the quarter ending 28 June, the company anticipates net sales in the range of $610-615 million and adjusted EBITDA of $43-48 million.