Stocks in the US producer of Kellogg’s Corn Flakes have jumped following news that chocolate giant Ferrero is near acquiring the company for around $3bn (£2.2bn). A takeout agreement for WK Kellogg, whose products include the Froot Loops and Rice Krispies breakfast cereals for the North American region, may be finalized as early as this week, said the Wall Street Journal and Financial Times.
The owner of Kinder and Ferrero Rocher brands in Italy has been growing in the past few years by acquiring Nestle’s confectionery business and a few other food companies.
WK Kellogg and Ferrero did not answer the BBC’s immediate request for comment. WK Kellogg shares jumped over 56% in after-hours trading in New York on Wednesday following the reports. The agreement could be worth twice the value of the firm’s $1.5bn stock market value when normal trading closed.
It would leave Ferrero with a commanding share of the US breakfast cereal market. The company was established in 1946 and is one of the largest players in the chocolate industry, with over 30 brands sold worldwide.
WK Kellogg has been financially troubled in recent years and has over $500m debt. In 2023, the US breakfast cereals operation was split off from its former parent company’s international and snacks business, which was renamed Kellanova.
The following year, Kellanova, which makes Pringles crisps and Pop Tarts, was bought by confectionery giant Mars for $36bn. Convenience food firms are facing major challenges as customers shift to healthier options, which has forced them to change the way they operate.
Businesses have also experienced an increase in their costs, prompting some companies to raise their prices. The company has also faced pressure from the Trump government, which has focused on artificial coloring in products such as Froot Loops under its “Make America Healthy Again” initiative.
Kellogg has announced that it will eliminate the synthetic dyes from cereals consumed in schools by the 2026-27 school year. But it is not yet planning a timeline to remove them from cereals sold in the marketplace. The founder of the company, Will Keith Kellogg, is widely regarded as the developer of corn flakes.
