WK Kellogg’s shares were up 31% in early afternoon trading Thursday.
Kellogg was founded in Battle Creek, Michigan, in 1906 after its founder accidentally figured out how to make flaked cereal while he was experimenting with granola. Kellogg still makes Corn Flakes, as well as Froot Loops, Special K, Frosted Flakes, Rice Krispies and other cereals.
Kellogg now has four U.S. plants, which are located in Michigan, Pennsylvania, Tennessee and Nebraska. It also has a plant in Mexico and a plant in Canada. The company has around 3,000 employees.
At the start of July, U.S. cold cereal sales were down 6% compared to the same period in 2022, according to market research company Nielsen IQ. Kellogg’s net sales fell 2% to $2.7 billion in 2024.
Brad Haller, a senior partner for mergers and acquisitions at West Monroe, said Kellogg’s large distribution network and relationships with grocery chains in North America is appealing to Ferrero because it would help the European company negotiate pricing and positioning for its products.
The purchase also helps Ferraro expand beyond snacks and sweets and into a meal category, Haller said. But the company also may wind up cutting Kellogg brands or shutting down manufacturing plants.
“As Americans, these brands are iconic and beloved by us, but a European company buying these wouldn’t have the same nostalgia,” Haller said.
Ferrero’s acquisition, which still needs approval from Kellogg shareholders, is expected to close in the second half of the year. Once the transaction is complete, Kellogg’s stock will no longer trade on the New York Stock Exchange and the company will become a Ferrero subsidiary.
