WK Kellogg Co. (NYSE: KLG) saw a 30% surge after Ferrero announced a $3.1 billion acquisition, valuing KLG at $23 per share. The deal includes iconic cereal brands like Frosted Flakes and Froot Loops, expanding Ferrero’s U.S. footprint. With shares trading near the offer price, investors wonder about further gains.

Spun off from Kellanova in 2023, WK Kellogg struggled with declining sales and slim margins. Despite this, Ferrero saw the brand equity and potential for growth, making the acquisition a strategic move to diversify beyond confectionery. The deal positions Ferrero in the $20B U.S. cereal market for cross-category growth.

WK Kellogg was undervalued before the acquisition, with a market cap around $1.5 billion. Ferrero’s offer represented a nearly 100% premium, reflecting KLG’s cheap relative valuation. Now trading near $23, the implied P/E ratio suggests limited room for further rerating, indicating a smarter way to play the market with broader exposure.

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Read more at Nasdaq: Ferrero Buys WK Kellogg: Sweet Deal or Fully Priced?