Shares of WK Kellogg, parent company of beloved childhood breakfast favorites such as Froot Loops and Frosted Flakes, spiked by over 50%. This latest spike comes on the heels of a report that the Italian confectionery giant Ferrero is buying them. According to The Wall Street Journal, this is all cause for celebration, as reported yesterday. Ferrero is set to complete its $3 billion acquisition of WK Kellogg any day, possibly as soon as this week.
WK Kellogg, which spun off into a standalone beverage company in 2023, has since Counters to become an independent, publicly traded firm. Prior to this split, it was within Kellanova. Kellanova continue to unapologetically showcase their best-selling brands in the candy aisle— Pringles and Cheez-It. This independence drive has freed WK Kellogg to focus its efforts on its legacy breakfast cereals business. This strategic pivot serves to make the company an attractive acquisition target itself.
Ferrero, best known for its iconic round hazelnut chocolates, has been on a tear in recent years to build its portfolio. The Italian firm’s possible purchase of WK Kellogg would be an emblematic leap into the breakfast space. This latest deal will significantly diversify Ferrero’s offerings, enabling them to better compete in categories beyond confections. It hopes to reach a bigger percentage of the U.S. market.
According to a person with knowledge of the situation, reported for POLITICO, negotiations have progressed at a rapid pace. Consequently, WR Kellogg’s stock price has experienced a dramatic rise. Investors were all smiles with the announcement, which can mean only one thing – investors are confident that the deal will provide killer synergies. Analysts speculate that this acquisition could enhance Ferrero’s product lineup and strengthen its position within the competitive food industry.
This rumored purchase jibes with Ferrero’s announced long-term growth strategy, including increasing its presence in multiple food categories. By purchasing WK Kellogg, Ferrero gets to expand into a much-loved breakfast category. They can take advantage of the powerful brand recognition that accompanies such coveted collectibles.