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Ferrero, the family-owned Italian food group behind Nutella spread and Tic Tac and Kinder sweets, has agreed to buy the US breakfast cereal company WK Kellogg in a deal worth $3.1bn including debt.
Ferrero will pay $23 a share in cash for the maker of Kellogg’s Corn Flakes, Rice Krispies and Froot Loops, representing a 40 per cent premium to its average share price over the past 30 days, the companies said on Thursday.
The takeover comes as the food industry grapples with changing consumer habits where a flight towards healthier options, driven in part by the boom in usage of weight-loss drugs, has forced manufacturers, particularly sweets companies, to alter their strategy.
WK Kellogg was spun off as a North American cereal specialist by parent company Kellogg Co, which renamed itself Kellanova and retained snacks brands such as Pop-Tarts and Pringles. Food giant Mars agreed to acquire Kellanova last year in a $36bn deal that is now facing antitrust scrutiny from European regulators.
WK Kellogg’s fortunes as an independent company have been disappointing. Its shares have underperformed the wider market since the spin-off in 2023. It also had net debt of $569mn as of March this year.
The Michigan-based group said on Thursday it expected to report net sales of between $610mn and $615mn in the second quarter, down about 9 per cent year on year. It has forecast adjusted earnings before interest, tax, depreciation and amortisation between $43mn and $48mn.
The transatlantic tie-up brings together two brands with a rich history. Company founder Will Keith Kellogg invented his cornflakes in 1894, laying the groundwork for what would become a cereal empire.
Ferrero was founded in 1946 by Italian confectioner Pietro Ferrero. The company is still under family ownership, and Ferrero’s grandson Giovanni serves as executive chair.
“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,” said Giovanni Ferrero, Ferrero’s executive chair. “Today’s news is a key milestone in that journey.”
WK Kellogg’s largest shareholder is the WK Kellogg Foundation, a charitable trust with about 16 per cent of outstanding stock. The foundation and the Gund family, another top shareholder, are backing the transaction, the companies said. Battle Creek, Michigan, will be Ferrero’s headquarters for North America cereal after the deal closes.
Ferrero, which generated revenue of €18.4bn in the 12 months to the end of August last year, has been pushing to expand in North America. In part, it has achieved this through acquisitions: buying ice cream maker Well Enterprises in 2022, Nestlé’s confectionery business for $2.8bn in 2018 and chocolate manufacturer Fannie May in 2017.
The food industry is also facing political pressure with the appointment of Robert F Kennedy Jr as the top US health official, who has targeted the artificial dyes in brands such as Froot Loops as part of his “Make America Healthy Again” agenda. Kellogg has pledged to remove synthetic colours from cereals in schools by the 2026-27 school year but has not set a timeline for cereals consumed outside of school.
Several food groups have struck deals in the past year, also driven by the need to adapt to changing consumer habits. In the past year, drinks giant Pepsi bought fast-growing prebiotic soda brand Poppi in a $1.95bn deal, as well as acquiring healthy Mexican-themed snack brand Siete Foods in a $1.2bn deal. Post Holdings, a rival cereal maker, bought food company 8th Avenue in an $880mn deal last month.
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