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Ferrero, the family-owned Italian food group behind Ferrero Rocher, TicTac and Kinder sweets, is in advanced discussions to buy the storied American breakfast cereal company WK Kellogg in a deal worth up to $3bn.
The takeover could be announced as soon as this week and values the company behind Kellogg’s Corn Flakes, Rice Krispies and Froot Loops as much as double its $1.5bn market value, according to two people familiar with the matter. There were no guarantees that a deal was clinched and timelines could slip, they added.
It comes as the food industry grapples with changing consumer habits where a flight towards healthier options, driven in part by the boom in usage of weight loss drugs, has forced manufacturers, particularly sweets companies, to alter their strategy.
WK Kellogg and Ferrero did not immediately respond to requests for comment.
WK Kellogg was spun off as a North American cereal specialist by parent company Kellogg Co, which renamed itself Kellanova and retained snacks brands such as Pop-Tarts and Pringles. Food giant Mars agreed to acquire Kellanova last year in a $36bn deal that is now facing antitrust scrutiny from European regulators.
WK Kellogg’s fortunes as an independent company have been disappointing. Its shares have underperformed the wider market since the spin-off in 2023. It also had net debt of $569mn as of March this year.
The Battle Creek, Michigan, company’s organic net sales declined by 5.6 per cent year on year in the first quarter to $667mn, while net profit plunged 45.5 per cent to $18mn. Shares jumped in after-hours trading by more than 50 per cent after the Wall Street Journal reported on the deal talks.
The potential transatlantic tie-up brings together two brands with a rich history. Company founder Will Keith Kellogg invented his cornflakes in 1894, laying the groundwork for what would become a cereal empire. Ferrero was founded in 1946 by Italian confectioner Pietro Ferrero. The company is still under family ownership, and Ferrero’s grandson Giovanni serves as executive chair.
WK Kellogg’s largest shareholder is the WK Kellogg Foundation, a charitable trust with about 16 per cent of outstanding stock.
Ferrero, which generated revenue of €18.4bn in the 12 months to the end of August last year, has been pushing to expand in the US, according to TD Cowen analyst Robert Moskow. In part it has achieved this through acquisitions: buying ice cream maker Well Enterprises in 2022, Nestlé’s confectionery business for $2.8bn in 2018 and chocolate manufacturer Fannie May in 2017.
The food industry is also facing political pressure with the appointment of Robert F Kennedy Jr as the top US health official, who has targeted the artificial dyes in brands such as Froot Loops as part of his “Make America Healthy Again” agenda. Kellogg has pledged to remove synthetic colours from cereals in schools by the 2026-27 school year but not set a timeline for cereals consumed outside of school.
A number of food groups have struck deals in the past year, also driven by the need to adapt to changing consumer habits. In the past year, drinks giant Pepsi bought fast-growing prebiotic soda brand Poppi in a $1.95bn deal as well as acquiring healthy Mexican-themed snack brand Siete Foods in a $1.2bn deal. Post Holdings, a rival cereal maker, bought food company 8th Avenue in an $880mn deal last month.
