Why are WK Kellogg Shares Skyrocketing in Premarket Trading Today?

WK Kellogg Co (NYSE: KLG) shares are experiencing a dramatic surge in premarket trading, jumping over 53% to $26.87 following reports of a potential $3 billion acquisition by Italian confectionery giant Ferrero.

The maker of iconic cereal brands like Froot Loops and Frosted Flakes has become the center of merger speculation after the Wall Street Journal reported that Ferrero could finalize the deal as soon as this week.

This potential acquisition would represent a significant premium to WK Kellogg’s current market valuation of approximately $1.5 billion, offering shareholders substantial upside from yesterday’s closing price of $17.50.

Ferrero’s Potential Acquisition of WK Kellogg Leads to Stock Surge

According to Reuters sources, Ferrero is close to finalizing a roughly $3 billion deal to acquire WK Kellogg, the company behind beloved breakfast cereals including Froot Loops, Frosted Flakes, and Special K.

The proposed acquisition values WK Kellogg at approximately $27.61 per share after accounting for $570 million in net debt, representing a significant premium to the company’s recent trading levels. This deal would mark Ferrero’s latest strategic move to expand its U.S. footprint, following previous acquisitions including Wells Enterprises and Nestle’s U.S. chocolate business for $2.8 billion.

The acquisition represents a diversification strategy for the 79-year-old Italian company, which is best known for confectionery products like Nutella, Ferrero Rocher, and Tic Tac. Under Chairman Giovanni Ferrero’s leadership, the company has been aggressively pursuing American brands to establish a stronger presence in the lucrative U.S. market.

Ferrero currently operates 15 plants and warehouses across the U.S., Canada, and the Caribbean, employing more than 5,100 people.

For WK Kellogg, which has been struggling with weak demand and declining sales as consumers trade down from premium cereals, this acquisition offers a potential lifeline.

The company, spun off from Kellogg Company in 2023, has faced challenges including scrutiny over artificial food dyes in its cereals and recently met with Health Secretary Robert F. Kennedy Jr. to discuss reformulating school cereals to eliminate artificial dyes.

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KLG Stock Performance and Market Metrics Analysis

WK Kellogg’s stock performance has been notably volatile, with shares closing at $17.50 on July 9th, up $0.59 or 3.49% from the previous session.

The stock has traded within a 52-week range of $14.80 to $22.21, indicating significant price fluctuations throughout the year. With a market capitalization of $1.51 billion and a PE ratio of 26.92, the company has been trading at elevated multiples despite its operational challenges.

The premarket surge to $26.87 represents a dramatic 53.37% increase from the previous close at the time of writing, with trading volume of 4.9 million shares compared to the average volume of 972,285 shares. This exceptional premarket activity reflects strong investor enthusiasm about the potential acquisition premium. The company’s forward dividend yield stands at 4.14%, with an ex-dividend date of May 30, 2025, and upcoming earnings scheduled for August 5, 2025.

The stock’s recent performance has been supported by acquisition speculation, with analysts noting that both WK Kellogg and its former sibling company Kellanova have delivered shareholder value by becoming attractive acquisition targets.

Kellanova, the other part of the original Kellogg Company, agreed to sell itself to Mars in a $36 billion deal last year, demonstrating the appeal of established food brands to strategic buyers seeking market consolidation opportunities.

Disclaimer: The author does not hold or have a position in any securities discussed in the article. All stock prices were quoted at the time of writing.