WK Kellogg Stock Soars 30%. Ferrero Is Acquiring the Cereal Maker for $3.1 Billion.

Kellogg cereals are shown at a store in New York City. (Bing Guan/Bloomberg)

Shares of WK Kellogg continued their dazzling ascent Thursday after the company confirmed chocolate maker Ferrero would acquire it for more than $3 billion.

In a statement, WK Kellogg said Ferrero had agreed to acquire the cereal maker for $23 a share in cash, or a total enterprise value of $3.1 billion. The deal includes WK Kellogg’s manufacturing, marketing, and distributing operations across the U.S., Canada, and the Caribbean.

The stock soared 30% to $22.84, heading for its highest close since May 2024, as well as the largest same-day percent increase on record, according to Dow Jones Market Data.

As of Wednesday’s close, WK Kellogg had a market value of around $1.5 billion, with more than $500 million in debt. The owner of popular cereal brands like Froot Loops and Frosted Flakes spun off from Kellogg in 2023.

Kellogg, which houses brands like Pringles and Cheez-It, became a separate publicly traded company called Kellanova. Last year, Kellanova agreed to sell itself to candy maker Mars in a deal valued at more than $30 billion.

Ferrero, meanwhile, is an the Italian company best known for its Ferrero Rocher chocolates and Nutella spread. The company has aimed to expand its footprint in North America through acquisitions, such as the buyout of ice cream maker Wells Enterprises in 2022.

Before that, the company acquired Nestlé’s U.S. chocolate business, the Chicago-based chocolate maker Fannie May, and Kellogg’s cookies and fruit snacks businesses. In the latest fiscal year, Ferrero generated 18.4 billion euros in revenue, equivalent to about $21.5 billion, marking 9% growth from previous year.

The deal with WK Kellogg can be seen as a lifeline for the beleaguered cereal company, which has grappled with weakening sales due to aggressive price hikes and changes in customer behavior as consumers seek to limit their consumption of sugar and carbohydrates.

In its latest March quarter, the company posted $663 million in net sales, down 6% from a year ago. Earnings fell to 20 cents per share from 37 cents a year earlier.

WK Kellogg has also come under fire for its use of artificial food dyes in breakfast cereals marketed to children. Health Secretary Robert F. Kennedy Jr. has been a vocal critic of artificial food dyes and has asked food companies to remove them from the supply chain.

Many peers including Hershey, Nestlé, Kraft Heinz, General Mills, Conagra Brands, and J.M. Smucker have vowed to pull synthetic colors from their U.S. portfolios by the end of 2027.

WK Kellogg said over 85% of its U.S. cereal sales come from products without artificial colors and that it is reformulating cereals served in schools to remove them. The company also promised not to launch any new products with artificial colors beginning in January 2026. Still, some existing brands, such as Froot Loops, contain them.

Write to Evie Liu at evie.liu@barrons.com and Mackenzie Tatananni at mackenzie.tatananni@barrons.com