Italian-based multinational company The Ferrero Group has struck a deal to acquire the century-old U.S. cereal company Kellogg’s for $3.1 billion.
The move comes amid efforts by the Italian confectioner to grow its sales and expand the company’s reach across North America.
Ferrero announced on Thursday it will add iconic American cereal brands including Corn Flakes, Froot Loops, Frosted Mini Wheats, Raisin Bran and Rice Krispies to its North American portfolio that already includes Nutella, Kinder, Tic Tac and Ferrero Rocher, as well as Nestle’s U.S. candy brands like Butterfinger, Nerds and SweeTarts.
“This is more than just an acquisition — it represents the coming together of two companies, each with a proud legacy and generations of loyal consumers,” Giovanni Ferrero, executive chairman of the Ferrero Group, said in a statement.
WK Kellogg CEO Gary Pilnick added that the transaction will enables Kellogg’s to “write the next chapter of our company’s storied legacy.”
Terms of the agreement allow Ferrero to acquire all outstanding equity of WK Kellogg Co. for $23 per share in cash. Once that transaction gets approval from Kellogg’s shareholders, Kellogg’s will cease to trade on the New York Stock Exchange as the company becomes a Ferrero subsidiary.
The deal is expected to close before the end of the year.
Kellogg’s, founded in Michigan in 1906, has been struggling with a long-term decline in U.S. cereal consumption, reporting in May a 6.2% decrease in year-over-year first quarter sales. Pilnick assured investors that Kellogg’s was “taking further actions to accelerate” its plans to adapt in a marketplace where “consumers continue to focus on health and nutrition.”
With News Wire Services
