Osmond Chia & Natalie Sherman
Business reporters, BBC News
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Italian chocolate giant Ferrero is taking over one of America’s oldest breakfast cereal companies, buying the maker of Kellogg’s Corn Flakes for $3.1bn (£2.3bn).
Ferrero said it planned to invest and expand WK Kellogg’s “iconic” brands, which include Froot Loops and Rice Krispies.
The private, family-owned Ferrero has been pushing to expand in recent years, buying Nestle’s confectionery business and several other food firms.
But with its latest deal it is taking on a portfolio facing challenges, as rising prices and health concerns erode the popularity of boxed cereals.
Founded in 1946, Ferrero is one of the world’s biggest players in the chocolate market, with more than 30 brands sold globally. Those include Nutella, Kinder, TicTac and other confectionery, such as Jelly Belly and Trolli.
The new acquisition will give the firm, which already has more than 14,000 staff in North America, a dominant position in the US breakfast cereal market.
The company said it was paying $23 per share for the company in cash. Reports that a deal was imminent had sent the firm’s share surging by more than 56% in overnight trading.
Chief executive Lapo Civiletti said the deal would complement Ferrero’s existing offerings “expanding Ferrero’s presence across more consumption occasions”.
Kellogg boss Gary Pilnick said he expected the deal to provide the firm with more resources, and that Ferrero, which is a private company not subject to the pressures of the public market, would provide a “great home for our people”.
Kellogg founder Will Keith Kellogg, who started the business in Michigan nearly 120 years ago, is widely considered to be the inventor of corn flakes.
Its mascots, such as Frosted Flakes’ Tony the Tiger, helped make it one of the most recognised American companies of the 20th century.
But the firm, which also makes Kashi and Raisin Bran, has been seen sales flatten in recent years and has more than $500m of debt.
In 2023, it was split off from its former parent company’s international and snacks business, which was renamed Kellanova and later sold to confectionery giant Mars for $36bn.
Households pressured by the rising cost of living have also increasingly opted for cheaper store brands over typically more expensive brand names.
The industry has also come under pressure from the Trump administration, which has targeted artificial colouring in brands like Froot Loops as part of its “Make America Healthy Again” campaign.
Kellogg has said it will remove the synthetic colours from cereals eaten in schools by the 2026-27 school year. But it has not yet set a timeline for taking them out of cereals sold to the general public.