Quick bites
- Ferrero eyes WK Kellogg in a $3bn US cereal deal
- Big names like Froot Loops and Special K in play
- WK Kellogg shares jump 56% on takeover buzz
In big news for snacks and confectionery, Ferrero Group is reportedly firming up a deal to acquire WK Kellogg in the US. The cereal giant sells household names like Froot Loops, Special K, Corn Flakes and Rice Krispies in North America.
Rumours have been flying since the Wall Street Journal (WSJ) reported a $3bn (€2.6bn) takeover was nearing, citing sources close to the matter. Ferrero did not immediately respond to a request for comment, but experts say the acquisition deal is believable.
“While unsubstantiated, the news sounds credible given Ferrero’s reported interest earlier in the year and their multi-year strategy to expand their US presence,” say analysts at TD Cowen. The investment bank estimates a $3bn deal would translate to $27.61 per share for equity holders after accounting for $570m of net debt.
The over half-a-billion-dollars worth of debt is a sign WK Kellogg has faced financial difficulties since The Kellogg Company split in two. Rumours of a Ferrero buyout have since sent WK Kellogg shares soaring by more than 56%.
The other half of the The Kellogg Company, Kellanova, is due to be bought by Mars, Inc. – another big name in confectionery looking to expand its snacks portfolio. The $36bn deal has been passed in the US; the European Commission has instigated an antitrust investigation.
If Ferrero successfully buys WK Kellogg, the latter’s cereals would fold into the Group’s portfolio, which includes Ferrero Rocher, Kinder and TicTac.
The Italian confectionery major now based in Luxembourg, has been actively expanding through acquisitions. Recent deals include Fresystem in Italy, Fulfil Nutrition in the UK, and Wells Enterprises in the US.
Notably, its 2018 purchase of Nestlé’s US confectionery business was also a big bet – comparable in value to the reported figure for the WK Kellogg acquisition.
Ferrero is buying WK Kellogg in a deal worth $3.1bn
Less than 24 hours after first reports that Ferrero Group was nearing a deal with cereals giant WK Kellogg Co in North America, it’s been confirmed.
The Italian confectionery company is buying Kellogg shares at $23 each, marking a deal worth $3.1bn (€2.65bn).
What does the takeover mean for both companies? Find out here: It's official: Ferrero buys Kellogg in $3bn deal