Dive Brief:
- Ferrero is buying cereal giant WK Kellogg for $3.1 billion as the Nutella maker further grows its footprint in the U.S.
- The acquisition would give the Luxembourg-based company a deeper North American presence in everything from cereal and ice cream to protein bars, cookies and confections.
- WK Kellogg became an independent company in October 2023 after Kellogg split up its snacking and cereal operations. Kellogg’s snacks business, which includes Cheez-It and Pringles, was renamed Kellanova. It is being purchased by candy giant Mars Wrigley for $36 billion.
Dive Insight:
Once known in the U.S. for its Nutella spread, golden-wrapped Ferrero Rochers and minty Tic Tacs, Ferrero has been on an acquisition spree to build its portfolio and connect with consumers across more eating occasions.
In 2018, it spent $2.8 billion to purchase Nestlé’s U.S. chocolate business in a deal that added more than 20 American candy brands to its portfolio, including Butterfinger, Baby Ruth and 100 Grand.
The sweets and snacks maker then bought Kellogg’s cookies and fruit snacks business for $1.3 billion a year later, which gave Ferrero an entry into cookies with the Keebler and Famous Amos brands. In 2022, Ferrero purchased ice cream maker Wells Enterprises, adding Blue Bunny and Halo Top to its portfolio.
The addition of WK Kellogg provides Ferrero with a seat at the breakfast table through cereals such as Frosted Flakes, Froot Loops and Rice Krispies. Ferrero committed to invest in and grow WK Kellogg Co's iconic brands following the acquisition, the company said.
"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 U.S.,” Giovanni Ferrero, executive chairman of the Ferrero, said in a statement. “Today's news is a key milestone in that journey, giving us confidence in the opportunities ahead."
After the transaction closes, Ferrero said WK Kellogg’s home in Battle Creek, Michigan, will remain a "core location" and be its headquarters for North American cereal.
The deal comes as Ferrero has posted upbeat results despite headwinds facing CPG companies around the world. During its most recent fiscal year, Ferrero generated revenue of 18.4 billion euros, or about $21.5 billion, marking an increase of 8.9% from the prior period. The U.S. was a region of strength for its business.
For WK Kellogg, the purchase would mark an end to its short time as a standalone company that has been mired by challenges.
WK Kellogg has grappled with a continued slowdown in cereal consumption amid a pullback in consumer spending. More recently, it's become a focal point of the FDA’s push to encourage companies to remove artificial colors from their foods. Net sales fell 2% in 2024 and are forecast to decline between 2% and 3% this year, according to the company.
In a note published a day before the deal was officially announced, Erin Lash, sector director of consumer equity research for Morningstar, said WK Kellogg could benefit from Ferrero's product and geographic reach to enhance its global retail standing.
At the same time, Ferrero's rationale for the deal “is likely anchored in WK's ability to generate cash … and its stable revenue base,” Lash said.
