Ferrero, the Italian confectioner behind Nutella and Kinder, is acquiring U.S. cereal company WK Kellogg for approximately $3.1 billion, at $23 per share, with the deal expected to close as soon as the week of July 10, 2025.

The acquisition aims to diversify Ferrero's revenue streams amid rising cocoa costs and changing consumer preferences, especially as Kellogg faces declining cereal sales and shifting demand.

Despite these challenges, the deal could offer long-term benefits, including market expansion and the potential to revitalize Kellogg's brands under Ferrero's management.

Kellogg's U.S. cereal sales have declined by 6% year-over-year as consumers opt for alternative breakfast options like protein bars, further pressuring the company's financial health.

WK Kellogg has experienced a 2-3% revenue decline in Q1 2025, driven by consumers shifting towards healthier breakfast options and the impact of tariffs.

The deal is part of a broader trend of consolidation in the packaged food industry, as companies respond to subdued demand, rising input costs, and increased competition from private-label products.

Both WK Kellogg and Kellanova are under pressure from weak demand and challenging market conditions, impacting their profitability and strategic options.

Following the announcement, WK Kellogg's stock surged nearly 50% in after-hours trading, reflecting investor optimism about the strategic move.

Ferrero's strategy includes reducing reliance on its core chocolate business, which faces rising costs, by expanding into the cereal and broader snack markets.

Investors see this acquisition as a low-risk, long-term opportunity to capitalize on Ferrero's potential to revitalize Kellogg's brands, though risks remain due to declining demand and regulatory issues.

The deal was officially confirmed on July 10, 2025, with both companies issuing a joint statement, marking a significant shift in the snack industry amid economic pressures and changing consumer habits.

The acquisition faces challenges such as regulatory hurdles, integration complexities, and managing Kellogg's existing debt, amid structural decline in the cereal market and regulatory scrutiny.