WK Kellogg (KLG) shares soared more than 30% on Thursday after the Italian chocolate maker Ferrero agreed to buy the company behind Froot Loops and Special K for $3.1 billion.
The agreement that values KLG shares at $23 each expands Ferrero’s reach in the U.S. market and diversifies its offerings to include breakfast staples.
Including today’s surge, Kellogg stock is up more than 50% versus its year-to-date low.
Is the Ferrero Deal Positive for KLG Stock?
Ferrero’s buyout deal delivers immediate value to KLG investors – effectively reversing a year of sluggish performance.
The transaction places WK Kellogg’s iconic cereal brands under the wing of a global powerhouse with deep experience in brand revitalization and distribution.
Ferrero’s track record of turning around acquired assets, combined with its scale and marketing muscle, offers Kellogg’s legacy brands a fresh runway for growth.
KLG stock is rallying today also because as a private subsidiary of the Italian confectionary, WK Kellogg will have greater resources and operational flexibility to compete more effectively in a shifting consumer landscape.
In short, it’s not just a payout for the cereal maker – it’s actually a vote of confidence in its long-term relevance.
Should You Buy Kellogg Shares Today?
While Ferrero deal is nothing but positive for WK Kellogg, it’s too late to invest in KLG shares now as they’ve already rallied more than 30% to near the deal price of $23.
Since the agreement signed with Ferrero is for an all-cash transaction that will take Kellogg private, there’s hardly any upside left in KLG stock for new investors.
Kellogg shares have already priced in the premium, and barring an unexpected bidding war or a regulatory hiccup, the stock is not particularly likely to climb further.
Simply put, the market has already reacted to the Ferrero news. Buying KLG now would mean chasing gains that have already materialized, with little to no room for additional return.
Note that Ferrero expects the aforementioned transaction to close by the end of 2025, provided the regulatory and shareholder approvals are secured by then.
