Quick bites
- Ferrero buys WK Kellogg for $3.1bn in a major cereal shake-up
- Iconic brands like Froot Loops and Special K join Ferrero’s lineup
- Deal boosts Ferrero’s reach across North America
- WK Kellogg gets much-needed relief and room to grow
Less than 24 hours have passed since first reports that Ferrero Group was nearing a deal with cereals giant WK Kellogg Co in North America. Now, it’s been confirmed – the Italian confectioner is buying WK Kellogg shares at $23 each, marking a deal worth $3.1bn (€2.65bn).
Ferrero will take ownership of the manufacturing, marketing and distribution of WK Kellogg’s breakfast cereal portfolio – which includes Froot Loops, Special K, Rice Krispies and Frosted Flakes – across the US, Canada and the Caribbean.
Giovanni Ferrero, executive chairman of the Ferrero Group, says the deal represents “more than just an acquisition”. It’s the “coming together” of two companies.
The deal grants Ferrero greater access to the North American market, which aligns with the Group’s multi-year strategy to expand its US presence. “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 US,” says the executive chairman.
Recent US-focused acquisitions include Well Enterprises and Nestlé’s US confectionery business, and the Kellogg takeover reinforces Ferrero’s commitment to “delivering value to consumers in North America”.
For WK Kellogg’s shareholders, the news will have come as a relief. The company had been struggling financially since The Kellogg Company split into WK Kellogg and Kellanova. WK Kellogg is in more than half-a-billion dollars worth of debt.
The Ferrero deal “maximises value” for WK Kellogg’s shareholders, believes the company’s chairman and CEO Gary Pilnick, and writes “the next chapter of our company’s storied legacy”. Becoming part of Ferrero equips WK Kellogg with more resources and flexibility to expand its brands in today’s “competitive” and “dynamic” market, he adds.
The CEO also hinted at potential future collaborations between the companies’ portfolios, by exploring “opportunities beyond cereal”.
Ferrero’s takeover of WK Kellogg comes as the other half of The Kellogg Company, Kellanova, is being bought by food giant Mars, Inc. The $36bn deal has been passed in the US, but hasn’t yet been approved in Europe, where the Commission is launching an antitrust investigation.
