WK Kellogg Co. (KLG) just got the deal of its shelf life. The cereal maker’s stock rocketed 31% to $22.84 on Thursday after news broke that it will be acquired by Ferrero for $3.1 billion in cash, or $23 per share. The Italian chocolate giant is absorbing Kellogg’s legacy breakfast business, bringing iconic brands like Froot Loops and Frosted Flakes under its sweet empire.
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The deal instantly doubles Kellogg’s market value, which stood near $1.5 billion before the news, and offers a lifeline to a company battered by consumer shifts, sugar backlash, and sagging sales. More than $500 million in net debt will also transfer as part of the transaction, which covers operations in the U.S., Canada, and the Caribbean.
A Stale Category Finds a Buyer
For Ferrero, this acquisition is more about scale than just cereal. The Nutella maker has been on an aggressive North American shopping spree, buying Nestlé’s (NSRGY) U.S. candy unit, snapping up Wells Enterprises in ice cream, and taking Kellogg’s cookie and fruit snack divisions off the table. Now, it’s circling back for the rest.
The WK Kellogg portfolio might be dated, but it still carries brand equity. That’s valuable to a buyer like Ferrero, which thrives at refreshing legacy names and integrating them into wider distribution networks. At $3.1 billion, it’s a relatively cheap price for household labels with nostalgic pull and shelf dominance.
Still, it comes with baggage. WK Kellogg has struggled to evolve as consumers swap sugar for protein and question artificial additives. Net sales fell 6% year over year in the first quarter to $663 million. Earnings plunged to just 20 cents per share, down from 37 cents.
Ferrero Forces a Rethink on Reformulation
Much of the pressure has centered on ingredients. With scrutiny rising around artificial food dyes, especially in products aimed at children, WK Kellogg has faced regulatory and reputational heat. U.S. Health Secretary Robert F. Kennedy Jr. has publicly called on the industry to drop synthetic colors entirely.
WK Kellogg has responded by reformulating many of its offerings. More than 85% of its U.S. cereal sales now come from products without artificial dyes, and the company has committed to removing them from all school products. By January 2026, no new product will launch with synthetic colors. But the classics, including Froot Loops, remain unchanged for now.
That leaves Ferrero with a challenge and an opportunity. It inherits the baggage, but also the chance to steer legacy brands into a cleaner, more modern era — much as it has done before.
Is Kellogg Stock a Buy or Sell?
Before Ferrero’s $3.1 billion deal sent shares flying, Wall Street wasn’t exactly bullish on WK Kellogg (KLG). Analyst sentiment was deeply cautious, with a “Moderate Sell” rating based on zero Buy calls, four Holds, and four Sells. The average 12-month KLG price target sat at just $16.63 — a steep 27% discount from the $22.84 buyout price.
With Ferrero now stepping in as buyer, it’s clear the premium wasn’t priced into the stock — and likely wasn’t fully anticipated by analysts. For investors trying to stay ahead of these surprise moves, tracking analyst sentiment and price targets on platforms like TipRanks can offer a helpful reality check, especially in sectors facing disruption or consolidation.
