Italian confectioner Ferrero, renowned for its iconic brands such as Nutella and Kinder, announced its acquisition of the century-old U.S. cereal company WK Kellogg for approximately $3.1 billion. This strategic move aims to bolster Ferrero’s North American sales footprint. The Ferrero Group revealed on Thursday that it will pay $23 per Kellogg share, encompassing WK Kellogg Co.’s six manufacturing plants and its extensive marketing and distribution network across the United States, Canada, and the Caribbean.
Following the announcement, WK Kellogg’s shares surged by 31% during mid-afternoon trading on Thursday. The acquisition underscores Ferrero’s ambition to diversify its portfolio and strengthen its position in the competitive North American market.
The Legacy of WK Kellogg
Founded in Battle Creek, Michigan, in 1906, WK Kellogg emerged from an accidental discovery by its founder, who was experimenting with granola. The company has since become synonymous with breakfast staples such as Corn Flakes, Froot Loops, Special K, Frosted Flakes, and Rice Krispies. Today, Kellogg operates four U.S. plants located in Michigan, Pennsylvania, Tennessee, and Nebraska, alongside facilities in Mexico and Canada, employing approximately 3,000 people.
The current iteration of the company was established in 2023, following the spin-off of Kellogg’s snack brands, including Cheez-Its and Pringles, into a separate entity known as Kellanova. Notably, Mars Inc., the maker of M&M’s, announced plans last year to acquire Kellanova in a deal valued at nearly $30 billion.
Ferrero’s Expansion Strategy
Ferrero, a privately held and family-owned company founded in Italy in 1946, has been actively pursuing growth in the U.S. market. In 2018, the company acquired Nestle’s U.S. candy brands, including Butterfinger, Nerds, and SweeTarts. More recently, in 2022, Ferrero purchased Wells Enterprises, the producer of popular ice cream brands like Blue Bunny and Halo Top.
Giovanni Ferrero, Executive Chairman of the Ferrero Group, expressed optimism about the acquisition, stating, “Over recent years, Ferrero has expanded its presence in North America, bringing together our well-known brands from around the world with local jewels rooted in the U.S. Today’s news is a key milestone in that journey, giving us confidence in the opportunities ahead.”
Challenges and Opportunities
WK Kellogg has faced challenges due to a long-term decline in U.S. cereal consumption, as consumers increasingly opt for protein bars, shakes, and other breakfast alternatives. Although cereal sales experienced a temporary boost during the COVID-19 pandemic, they have continued to decline post-pandemic. According to Nielsen IQ, U.S. cold cereal sales were down 6% at the start of July compared to the same period in 2022. Additionally, Kellogg’s net sales fell by 2% to $2.7 billion in 2024.
Gary Pilnick, WK Kellogg’s chairman and CEO, is optimistic about the merger, citing the potential for Kellogg to leverage Ferrero’s resources to grow its brands and explore opportunities beyond cereal. Pilnick noted Ferrero’s history of supporting the communities it operates in, which aligns with Kellogg’s values.
“As Americans, these brands are iconic and beloved by us, but a European company buying these wouldn’t have the same nostalgia,” said Brad Haller, a senior partner for mergers and acquisitions at West Monroe.
Looking Ahead
The acquisition, pending approval from Kellogg shareholders, is anticipated to close in the second half of the year. Upon completion, Kellogg’s stock will cease trading on the New York Stock Exchange, transitioning the company into a Ferrero subsidiary. This move represents Ferrero’s strategic expansion beyond its traditional focus on snacks, chocolate, and sweets, into the meal category.
However, the integration may lead to significant changes, including potential brand cuts or plant closures. Despite the challenges, Ferrero’s acquisition of WK Kellogg marks a pivotal moment in its North American expansion strategy, setting the stage for future growth and innovation in the breakfast cereal market.
