By Savyata Mishra and Aishwarya Venugopal
(Reuters) -WK Kellogg on Thursday agreed to be bought by the owner of Ferrero Rocher in a deal worth around $3.1 billion, uniting two of the world’s most recognizable consumer brands to weather a tough spending backdrop marked by persistent inflation.
Deal making in the snacking space has picked up pace as food brands battle with muted sales in the wake of price hikes owing to higher input costs and a shift in consumer preference for healthier options.
Kellanova, which was created at the same time as WK Kellogg when Kellogg Company split into two, is also in the process of being acquired by candy giant Mars in a nearly $36 billion deal.
Shares of WK Kellogg jumped 30.6% at $22.85 in mid-day trading on Thursday, nearly matching the premium that Ferrero’s $23 per share deal represented.
The acquisition, Ferrero’s biggest since 2018, will bring legacy brands such as Nutella, Kinder, Tic Tac, Frosted Flakes, Froot Loops and Special K under one roof when the transaction closes, expectedly in the second half of 2025.
“WK Kellogg’s (acquisition) gives it diversification from its cocoa heavy portfolio and instant U.S. distribution, shelf space, and a brand portfolio … in a lucrative market that it can drizzle with innovation at a relatively good price,” Michael Ashley Schulman, chief investment officer of Running Point Capital Advisors said.
Strong demand and strained supply had pushed cocoa prices to a record high last year, sparking concerns among companies that use the chocolate-making ingredient for packaged food items.
Several U.S.
packaged food companies, including J.M. Smucker, Kraft Heinz and PepsiCo, have also been hit by uncertainties sparked by President Donald Trump’s erratic trade policy.
More recently, they even came under pressure from Health Secretary Robert F.
Kennedy Jr.’s Make America Healthy Again Commission to eliminate the use of synthetic dyes.
Ferrero, the maker of Nutella hazelnut spread, has turned into a global group, boosted by the aggressive acquisition campaign launched by its executive chairman, Giovanni Ferrero.
In 2018, Ferrero bought Nestle’s U.S.
confectionery business for $2.8 billion.
The group reported a turnover of 18.4 billion euros ($19.2 billion) in the financial year ending on August 31 and said it had increased its investments to boost manufacturing capabilities and expand across categories.
(Reporting by Medha Singh, Savyata Mishra and Aishwarya Venugopal in Bengaluru; Editing by Janane Venkatraman, Mrigank Dhaniwala, Sriraj Kalluvila and Shinjini Ganguli)
