Ferrero will buy Kellogg for $23 per share in cash for a total of about $3.1 billion, the companies announced Thursday. The deal has been approved by Kellogg’s board of directors, though it still needs to be approved by shareholders and regulators.

“WK Kellogg Co is a renowned company, in operation for nearly 120 years, and a leader shaping the future of breakfast. Ferrero, which also brings over 75 years of heritage, has long admired WK Kellogg Co’s legacy and is proud to be entrusted with carrying these iconic American brands forward,” a release said.

Headquartered in Battle Creek, WK Kellogg makes cereals like Rice Krispies, Frosted Flakes and Froot Loops. It became a standalone company in 2023, when Kellogg Company split into two: WK Kellogg, with a focus on cereal, and Kellanova, which includes snack foods and international cereals. CNBC reported that shares of WK Kellogg fell about 2% this year, but they soared following Wednesday’s news of the potential deal.

“We believe this proposed transaction maximizes value for our shareowners and enables WK Kellogg Co to write the next chapter of our company’s storied legacy,” WK Kellogg Co. CEO Gary Pilnick said in a statement. “Since becoming an independent public company in October 2023, we have made excellent progress on our journey to become a more focused and more profitable business – driven by our tremendous people and a winning culture – all while building a strong foundation for future growth. Joining Ferrero will provide WK Kellogg Co with greater resources and more flexibility to grow our iconic brands in this competitive and dynamic market. As a family-owned private company with values in line with our founder W.K. Kellogg, Ferrero provides a great home for our people and has a track record of supporting the communities in which it operates. We look forward to collaborating with their team to deliver on the great promise of cereal, explore opportunities beyond cereal, and help us bring our best to consumers every day.”

Ferrero is the world’s third largest chocolate confectionary company, with products available in more than 170 countries, according to its website. Its brands include Nutella, Butterfinger, Kinder, Blue Bunny and Ferrero Rocher. It previously bought the Keebler and Famos Amos brands from Kellogg in 2019.

When the deal goes through, Ferrero will own all manufacturing, marketing and distribution of Kellogg products in the U.S., Canada and the Caribbean. Ferrero said the purchase is part of its “plan for strategic growth and expands the Company’s reach across more consumption occasions with renowned beloved brands and strong consumer relevance.” The company said it intended to “invest in and grow” big Kellogg brands like Frosted Flakes, Froot Loops, Frosted Mini Wheats, Special K, Rice Krispies, Raisin Bran, Kashi and Bear Naked.

Russell Zwanka, the director of Western Michigan University’s food marketing program, said consumers shouldn’t notice a difference in the cereal aisle. Rather, the shakeup is behind the box, giving the Michigan brand more resources to grow in the crowded field of consumer-packaged goods, or CPG.

“WK Kellogg is a $2.7 billion company and in the CPG world, Nestle is over $120 billion, PepsiCo is $80 billion, so you need scale to survive in this industry,” Zwanka said.

EMPLOYEES ENCOURAGED BY DEAL DETAILS

The pending sale was a surprise for employees.

“It was pretty hush-hush,” said Trevor Bidelman, union vice president and business agent for Bakery, Confectionary, Tobacco Workers and Grain Millers Union Local 3G and a fourth-generation Kellogg worker.

But its details are promising, Bidelman said. He said a broadcasted town hall Thursday morning offered some insight into how workers will be affected: They were told their current contract will be honored without changes for salaried workers for at least a year after the deal closes.

“To me, this is showing that Ferraro is kind of an employee-oriented company, family-oriented company that’s actually going to care about the employees and that’s always very huge,” Bidelman said.

There was also discussion of investing in Kellogg and its facilities, which Bidelman said was necessary.

“When the split took place, you could tell the WK … was going to focus back on being a cereal business — money to be made there, making the decisions more efficiently. So really, with this group coming in, saying that they’re just merely wanting to continue what we’ve already started and that this is not so much an acquisition as it is a partnership, like that is all very good stuff here,” Bidelman said.

In a release, Battle Creek welcomed Ferrero even as it acknowledged it was “too early to predict what this change may mean” for the city.

“W.K. Kellogg Co. has shown a strong commitment to Battle Creek since its formation,” Interim City Manager Ted Dearing said in a statement. “We are hopeful that this commitment will continue under Ferrero’s ownership.”

“We look forward to building a strong, long-term relationship that supports their success and secures their presence in our community for years to come,” Mayor Mark Behnke stated.

Kara Beer, president of the Battle Creek Area Chamber of Commerce, said time will tell how the effects of the deal will ripple across the community. But she also noted Ferrero and Kellogg share the same family values that have built a lasting relationship with Battle Creek.

“We’re on a good, good streak of great things happening here in Battle Creek and I think that this once we figure out more details of what this actually means, that is going to make this community even stronger,” Beer said.

But should the Battle Creek plant close, economic expert Brian Long said it will be “not as big of a deal as when they’ve lost other companies.”

“The number of people that are going to work in this industry is obviously declining,” said Long, the director of supply chain management at the Grand Valley State University Seidman College of Business. “That makes a big difference over the long term.”

“They’re making dry cereal,” he said. “Well, if you look at the lines at McDonald’s in the morning or any other fast food place, you realize that dry cereal is on the decline.”

He added that while the company had expanded with products like Pop Tarts, those brands all left with Kellanova.

“They spun off the good stuff … and left themselves just with the cereal business,” he said. “They probably knew (that) was probably going to close at some point in time, if they couldn’t find a buyer. Fortunately, they did find a buyer.”