Reports suggest Italian confectionery giant Ferrero is on the cusp of acquiring the North American breakfast cereals business WK Kellogg for $3bn.
The Wall Street Journal was first out of the blocks, citing unnamed people familiar with the proceedings as saying the Ferrero Rocher and Nutella maker is “nearing” a deal for the company.
A source for Reuters, also unnamed, followed with the suggestion an acquisition could be sealed as soon as this week, quoting the same $3bn price tag as the WSJ.
WK Kellogg was spun-off from the parent Kellogg in 2023 as the business split in two to create separate independent public companies. Headed up by Kellogg executive Gary Pilnick, it now focuses on breakfast cereals across the US, Canada and Caribbean markets with brands such as Raisin brand and Special K.
The other half of Kellogg – Kellanova, focused on the rest of the global cereals business outside North America, snacks such as Pringles crisps and frozen breakfast foods – is in the throes of a $36bn takeover by privately owned confectioner Mars, inked last August.
Just Food has asked Ferrero and WK Kellogg to substantiate the takeover reports and confirm if a deal is imminent.
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By GlobalDataTD Cowen consumer goods analyst Robert Moskow suggested a $3bn price tag for WK Kellogg would translate to $27.61 a share after accounting for $570m of net debt. The shares were at $26.26 in pre-market trading today (10 July) following a late rally yesterday on the back of the takeover reports.
“While unsubstantiated, the news sounds credible given Ferrero’s reported interest earlier in the year and their multi-year strategy to expand their US presence,” Moskow wrote in a research note.
Like Mars, Ferrero is also privately owned. It generated a turnover of €18.4bn ($21.5bn) in the year ended 31 August, an increase of 8.9%, according to its website.
The company has 37 production plants and employs 47,000 people.
A WK Kellogg takeover would be Ferrero’s latest move to expand its product portfolio into other product areas through M&A.
The Kinder chocolate maker has in recent years struck deals for companies including US ice-cream maker Wells Enterprises and the UK’s Burton’s Biscuit Company.
Ferrero has also used M&A to build its position in the US. As well as the move for Wells, the early part of this year saw the Tic Tac brand owner acquire protein snacks maker Power Crunch in California. That built on the 2024 deal for the US-based biscotti biscuits business Nonni’s Bakery. Financial terms were not revealed for any of the transactions.
WK Kellogg’s annual results issued in February, the first full year since the spin-off, showed sales and profits were under pressure in 2024.
Reported sales fell 2% to $2.71bn and were down 1.1% on an adjusted basis.
EBITDA dropped 12.7% to $193m. However, on an adjusted and “standalone” basis, EBITDA climbed 3% and 6.6%, respectively, to $275m.
Nonetheless, net income plunged 34.5% to $72m and was down 9.1% in adjusted terms at $149m. Diluted EPS slid to $0.82 from $1.28 a year earlier.
