Ferrero, the famous Italian chocolate king, is to buy WK Kellogg Company for $3.1 billion (£2.3 billion). This acquisition is a cunning plan that would significantly boost Ferrero’s current presence in the U.S. breakfast cereal category. It will strengthen their lineup of beloved local brands. The deal includes a $23 per WK Kellogg share in cash. Taken together, it’s an extraordinary moment for both companies.
Ferrero was established in Alba in 1946 and soon started making waves in the global chocolate market. Today, it stands proudly behind a multifaceted portfolio of more than 30 brands that are sold globally. With over 14,000 employees spread over every US state and Canadian province, the company’s operations in North America add further weight to their prominent position in the region. Ferrero has already had big success integrating WK Kellogg, home to great brands like Froot Loops and Rice Krispies. This acquisition is a great fit with Ferrero’s strategy to expand its product portfolio across various consumer occasions.
WK Kellogg earlier this year became an independent company following its split from its former parent. That parent company would later go on to rebrand itself as Kellanova. The deal left Kellanova’s international and snacks business—which today is worth an unbelievable $36 billion—recently sold to inedible confectionery-seeking giant Mars. This landscape creates an ideal opening for Ferrero to branch into the breakfast cereal industry. Today, the brand is able to better capitalize on increased consumer demand for breakfast items.
In purchasing WK Kellogg, Ferrero plans to pour hundreds of millions of dollars into making the brand more attractive and marketable to consumers. The company is committed to modernizing and even expanding those “iconic” products, but keeping their legacy charm intact. WK Kellogg’s mascots, including Frosted Flakes’ Tony the Tiger, have become cultural icons. Ferrero intends to use these widely known characters in its promotional efforts.
The acquisition will do more than bolster Ferrero’s U.S. portfolio—it’ll give the company a crucial leg up in the increasingly competitive breakfast category. Ferrero has the opportunity to marry WK Kellogg’s strong brands with their own. This integration will lead to amazing synergies, augmenting product offerings and increasing consumer choices.