Ferrero buys Kellogg for $3.1 billion

Ferrero’s aim in acquiring this breakfast giant (Corn Flakes, Froot Loops, Rice Krispies, All-Bran, etc.) is to accelerate its diversification at a time of soaring cocoa prices, as well as its growth in North America.

Ferrero will pay $23 per WK Kellogg share, a 31% premium to the US group’s closing price on the New York Stock Exchange on Wednesday.

Faced with changing consumer habits, in search of healthier products, the American company, valued at $1.5 billion on the stock market on Wednesday, has more than $560 million in debt.

The transaction was unanimously approved by the Boards of Directors of both companies. It is expected to be finalized in the second half of the year, following approval by WK Kellogg shareholders and regulatory authorities.

Investors welcomed the merger. Indeed, on Thursday, WK Kellogg shares climbed over 30% on the New York Stock Exchange.

“Ferrero’s goal is to grow in the U.S. through acquisitions, having already bought [Swiss group] Nestlé’s U.S. confectionery business” for $2.8 billion in 2018, noted the Wall Street Journal. The company also bought Wells Enterprises, maker of Blue Bunny ice cream, in 2022.

Ferrero, founded in 1946, is currently “the world’s third-largest manufacturer of chocolate confectionery”, reports the Wall Street Journal. Among its 35 brands sold in over 170 countries are flagship products Ferrero Rocher, Nutella, Kinder and Crunch.

The group posted sales of 18.4 billion euros in its last fiscal year, an increase of almost 9%. It employs 61,000 people worldwide.

In 2023, Kellogg’s split into two separate groups: WK Kellogg (cereals) and Kellanova (snacks, including Pringles, Eggo, Nutrigrain, Cheez-It, etc.). Kellanova was also acquired in 2024. The American food group Mars acquired it for $36 billion.