Ferrero, known for its popular product Nutella, plans to acquire cereal giant Kellogg for approximately $3.1 billion.
In a significant move, Ferrero, the Italian confectionery giant, has agreed to acquire WK Kellogg Co, the North American cereal business spun off from Kellogg Company, for $23.00 per share in cash, representing a total enterprise value of $3.1 billion. This deal, which covers the manufacturing, marketing, and distribution of iconic cereal brands such as Froot Loops, Frosted Flakes, and Rice Krispies, is the latest in Ferrero’s aggressive expansion strategy in North America.
Ferrero, founded in Italy nearly 80 years ago, has been expanding its American reach. The company has already acquired several prominent American brands, including Butterfinger, Keebler, Famous Amos, and Blue Bunny, as well as the U.S. chocolate business of Nestlé. With this acquisition, Ferrero’s North American operations now span 22 plants and 11 offices, employing over 14,000 people.
The acquisition is a strategic push into the U.S. breakfast market, a category where Ferrero previously had limited presence. It also aligns with the company’s broader aim to grow both geographically and by product category. WK Kellogg Co shareholders will receive a 40% premium to the 30-day volume-weighted average trading price, reflecting the strategic value Ferrero places on these brands.
The deal comes on the heels of the 2024 sale of Kellanova (the remaining global snacking business of the former Kellogg Company) to Mars in a transaction exceeding $30 billion, underscoring the ongoing consolidation and transformation in the global packaged food sector.
The long-term success of this transaction will depend on effective integration, regulatory outcomes, and Ferrero’s ability to drive growth in the competitive breakfast cereal market. The acquisition is expected to close in the second half of 2025, pending shareholder and regulatory approvals.
This deal unites the makers of household brands such as Nutella and Frosted Flakes. However, it does not include any details about how the merger will affect the research and development, production, distribution, marketing, advertising, pricing, or availability of either company’s products.
WK Kellogg Co, the parent company of Kellogg, expects that joining Ferrero will provide them with greater resources and more flexibility to grow their iconic brands. The deal was announced in May, and Giovanni Ferrero, executive chairman of the Ferrero Group, stated that this is a key milestone in Ferrero’s expansion in North America.
This move is part of a broader trend of consolidation in the global food industry, as companies seek scale, diversification, and access to new consumer segments. This could prompt further mergers and acquisitions among competitors seeking to keep pace. Consumers may see expanded innovation and marketing around beloved cereal brands, but there could also be concerns about reduced competition and potential price changes in the breakfast category.
- Ferrero's financials are expected to see a significant boost with the acquisition of WK Kellogg Co, as the deal represents a total enterprise value of $3.1 billion and aligns with the company's broader aim to grow both geographically and by product category.
- In light of the acquisition, ESG investors may be interested to know how the merger of the makers of iconic brands such as Nutella and Frosted Flakes will impact the company's ESG performance in terms of business operations and governance.
- As part of the expansion strategy, Ferrero's North American operations will now have the financial resources to drive growth in the competitive breakfast cereal market, allowing for potential innovations and marketing campaigns to reach a broader audience.
