Italian confectionery giant Ferrero, known for its brands like Nutella and Ferrero Rocher, is reportedly close to finalising a deal to acquire WK Kellogg, the maker of popular cereals such as Froot Loops and Frosted Flakes – a source has told Reuters.

This potential acquisition, valued at approximately $3 billion, would unite two prominent players in the consumer food sector and significantly enhance Ferrero's footprint in the US market.

According to a Reuters' source familiar with the matter, the acquisition could be completed as early as this week, a move that has led to a nearly 50% surge in WK Kellogg's shares during premarket trading. The company's market value, currently around $2.31 billion, has been under pressure following a recent downgrade in its annual sales and profit forecasts, attributed to sluggish consumer spending.

Ferrero's chairman Giovanni Ferrero has been on an aggressive acquisition spree to diversify the company's portfolio beyond confectionery. Since its inception in 1946, Ferrero has transformed into a global powerhouse, recently acquiring Wells Enterprises, known for Blue Bunny ice cream, and Nestlé's US chocolate business for $2.8 billion. The company now operates 15 facilities across North America, employing over 5,100 people.

WK Kellogg, which separated from Kellogg Company in 2023, has faced challenges with declining sales as consumers increasingly opt for more affordable options. The company has also come under scrutiny regarding its use of artificial food dyes in its cereals, prompting recent discussions with health officials about reformulating its products for school environments.

While neither Ferrero nor WK Kellogg has officially confirmed the details of the acquisition, the reported deal underscores the continuing trend of consolidation in the food and beverage sector as companies seek to adapt to changing consumer preferences and market dynamics.