BATTLE CREEK, Michigan: In a major consolidation of iconic food brands, WK Kellogg has agreed to be acquired by the owner of Ferrero Rocher in a $3.1 billion deal. The agreement brings together well-known names like Nutella, Kinder, Tic Tac, and Frosted Flakes under one roof, as the packaged food industry faces rising costs and shifting consumer tastes.

The deal comes as legacy food companies navigate inflation, changing health preferences, and a slowdown in post-pandemic spending. M&A activity has surged across the snacking sector as brands look to offset muted growth and maintain shelf space.

Kellanova, the sibling company formed alongside WK Kellogg during Kellogg Company's recent split, is also being acquired by Mars in a separate $36 billion transaction.

Shares of WK Kellogg surged 30.6% to $22.85 in mid-day trading, closely aligning with Ferrero's $23-per-share offer.

The acquisition marks Ferrero's largest since 2018 and is expected to close in the second half of 2025. The deal gives Ferrero a foothold in the U.S. cereal market and a more diversified product mix.

"WK Kellogg's (acquisition) gives it diversification from its cocoa-heavy portfolio and instant U.S. distribution, shelf space, and a brand portfolio ... in a lucrative market that it can drizzle with innovation at a relatively good price," said Michael Ashley Schulman, chief investment officer at Running Point Capital Advisors.

Cocoa prices hit record highs last year due to strong demand and tight supply, straining costs for companies that rely on chocolate ingredients.

U.S. food giants like J.M. Smucker, Kraft Heinz, and PepsiCo have also faced headwinds from trade policy uncertainties and mounting regulatory pressure. Recently, these companies have been urged by Health Secretary Robert F. Kennedy Jr.'s Make America Healthy Again Commission to eliminate synthetic dyes from their products.

Ferrero's global expansion has been driven by its executive chairman Giovanni Ferrero, who led a series of acquisitions over the past decade. In 2018, the company acquired Nestlé's U.S. confectionery business for $2.8 billion.

Ferrero reported €18.4 billion ($19.2 billion) in turnover for the financial year ending August 31, with ongoing investments in manufacturing and category expansion.