Ferrero Confirms Deal To Buy Wk Kellogg For $3.1bn

WK Kellogg’s Rice Krispies cereal brand. Credit: calimedia / Shutterstock.com

Ferrero has confirmed nan confectionery elephantine has entered an statement pinch WK Kellogg to get nan US-based meal cereals business for $3.1bn.

The acquisition value is simply a tad complete nan $3bn speculated yesterday (9 July) successful media reports, quoting unnamed sources, that a woody was imminent.

Ferrero said successful a connection nan takeover of WK Kellogg, successful a woody struck for $23 a share, is expected to adjacent successful nan 2nd half of nan twelvemonth but is taxable to regulatory approvals and clearance by shareholders of nan North American cereals manufacturer.

The Italy-based Ferrero Rocher and Nutella shaper added nan transaction covers WK Kellogg’s “renowned beloved brands” successful nan US, Canada and nan Caribbean specified arsenic Froot Loops, Special K, Rice Krispies and Raisin Bran.

Giovanni Ferrero, nan executive president of privately owned Ferrero, said: “This is much than conscionable an acquisition – it represents nan coming together of 2 companies, each pinch a proud bequest and generations of loyal consumers.

“Over caller years, Ferrero has expanded its beingness successful North America, bringing together our well-known brands from astir nan world pinch section jewels rooted successful nan US.

The Kinder cocoa shaper has successful caller years struck deals for companies including US ice-cream shaper Wells Enterprises and nan UK’s Burton’s Biscuit Company.

Ferrero has besides utilized M&A to build its position successful nan US. As good arsenic nan move for Wells, nan early portion of this twelvemonth saw nan Tic Tac marque proprietor get protein snacks shaper Power Crunch successful California. That built connected nan 2024 woody for nan US biscotti biscuits business Nonni’s Bakery. Financial position were not revealed for immoderate of nan transactions.

WK Kellogg was spun-off from nan genitor Kellogg successful 2023 arsenic nan business divided successful 2 to create abstracted independent nationalist companies and is headed up by Kellogg executive Gary Pilnick arsenic president and CEO.

The different half of Kellogg – Kellanova, focused connected nan remainder of nan world cereals business extracurricular North America, snacks specified arsenic Pringles crisps and stiff meal foods – is successful nan throes of a $36bn takeover by privately owned confectioner Mars, inked past August.

Pilnick said successful today’s statement: “We judge this projected transaction maximises worth for our shareowners and enables WK Kellogg Co. to constitute nan adjacent section of our company’s storied legacy.

“Joining Ferrero will supply WK Kellogg Co. pinch greater resources and much elasticity to turn our iconic brands successful this competitory and move market.”

After nan transaction is finalised, WK Kellogg will proceed to run retired of its Battle Creek, Michigan headquarters, which will go nan guidelines for Ferrero successful North American meal cereal.

The shares successful nan cereals business were up 30% astatine $22.84 arsenic of 3:02pm BST successful London, extending gains yesterday erstwhile nan speculation of a woody emerged.

WK Kellogg’s yearly results issued successful February, nan first afloat twelvemonth since nan spin-off, showed income and profits were nether unit successful 2024.

Reported income fell 2% to $2.71bn and were down 1.1% connected an adjusted basis.
EBITDA dropped 12.7% to $193m. However, connected an adjusted and “standalone” basis, EBITDA climbed 3% and 6.6%, respectively, to $275m.

Nonetheless, nett income plunged 34.5% to $72m and was down 9.1% successful adjusted position astatine $149m. Diluted EPS slid to $0.82 from $1.28 a twelvemonth earlier.

Ferrero, meanwhile, which besides owns nan Keebler brand, generated a turnover of €18.4bn ($21.5bn) successful nan twelvemonth ended 31 August, an summation of 8.9%, according to its website.

The institution has 37 accumulation plants and employs 47,000 group globally. It added coming that successful North America nan institution now has much than 14,000 unit crossed 22 accommodation and 11 offices.

Lapo Civiletti, nan CEO of Ferrero, said nan transaction pinch WK Kellogg “marks an important measurement towards expanding Ferrero’s beingness crossed much depletion occasions and reinforces our committedness to delivering worth to consumers successful North America”.

Ahead of its second-quarter results owed connected 5 August, WK Kellogg provided immoderate preliminary figures today.

For nan 4th to 28 June, nan institution expects nett income to beryllium successful nan scope of $610-615m and adjusted EBITDA of $43-48m.