Italian corporation Ferrero, one of the largest producers of chocolate and snacks in the world, announced a strategic purchase of the American company WK Kellogg — manufacturer of iconic breakfast cereals, including Froot Loops and Frosted Flakes. The transaction value will be $ 3.1 billion. This news immediately caused a stir in the stock market: WK Kellogg quotes soared by 30% at the time of publication of the statement.
The purchase of WK Kellogg marks one of Ferrero's most ambitious expansions in the U.S. market. The transaction is awaiting approval from shareholders and regulators and is expected to close in the second half of this year. Ferrero, strengthening its position in the FMCG (consumer goods) segment, relies on the wide penetration of the WK Kellogg brand in American households and the nostalgic attachment of consumers to iconic products.
WK Kellogg itself was spun off into an independent entity only in 2023 as part of a restructuring of the former Kellogg holding, which focused on more marginal and fast-growing areas such as snacks. The new Kellanova brand continued to develop lines like Pringles and Cheez-It, leaving the breakfast segment as less promising. Despite the stable recognition, WK Kellogg suffered from a decline in investor interest before the deal: since the beginning of 2024, its shares have lost more than 2%, and the market capitalization has dropped to $ 1.5 billion. Ferrero offered $ 23 per share, which is 31% higher than the closing price.
The US breakfast market is a segment with a high share of traditional brands, but also with growing challenges. Consumers are increasingly opting for healthier and more functional products. In addition, under the pressure of inflation, purchasing power flows towards private supermarket brands. Against this background, the multinational group's interest in a traditional brand looks both bold and pragmatic: Ferrero apparently expects to revitalize a recognizable product through global marketing, technological investments and new distribution channels.
In recent years, Ferrero has stepped up its expansion in the United States. The company has already acquired Nestlé's American sweets business, as well as Halo Top ice cream, expanding its portfolio beyond the usual Nutella, Kinder and Ferrero Rocher brands. Only in May, Ferrero introduced a new line of products aimed at American consumers: it included, in particular, peanut Nutella and Tic Tac candies with Dr Pepper flavor. Judging by the statements of the management, the US is seen as a key market for growth in the coming years.
"In recent years, we have consistently expanded our presence in North America. Today's transaction is an important step that strengthens our confidence in the potential of this region," said Giovanni Ferrero, Executive Chairman of the Ferrero Group.
Despite the positive background of the transaction, WK Kellogg does not plan to hold a conference with investors following the results of the quarter due to the "special situation". According to preliminary data, the company expects net revenue of $ 610-615 million and adjusted EBITDA in the range of $ 43 to $ 48 million. In the context of potential synergies with the global distributor and marketing giant that is Ferrero, these figures can be the starting point for a new phase of brand growth.
Experts emphasize that consolidation in the packaged food segment continues, and Ferrero follows the global trend of consolidation. Against the backdrop of slowing economic growth in Europe and the United States, as well as a sharp tightening of competition in the Asian region, global players are shifting their focus to brands with high recognition and a stable consumer base. Buying WK Kellogg meets this logic.
If the transaction is completed without delay, it will not only strengthen Ferrero's position in the United States, but also give a new impetus to the redistribution of influence in the global snacks and breakfast market. In the coming months, the company is expected to reveal plans to integrate WK Kellogg into its existing brand ecosystem, including the potential to enter emerging markets and launch new product lines.
In the meantime, investors are watching how the shares of other players in the sector will recoup. Judging by the dynamics of WK Kellogg, demand for conservative but strategically important assets remains consistently high.