Ferrero Acquires WK Kellogg for $3.1B, MP Materials Secures $400M DOD Investment

Ferrero International has agreed to acquire WK Kellogg for $3.1 billion. MP Materials has secured a $400 million equity investment from the US Department of Defense to build a new plant.

Ferrero International, the Italian confectionery giant known for brands such as Nutella and Ferrero Rocher, has reportedly agreed to acquire WK Kellogg, the maker of popular cereals like Froot Loops and Frosted Flakes, for approximately $3.1 billion [1]. The deal, which could be finalized as early as this week, is expected to significantly enhance Ferrero's footprint in the U.S. market. WK Kellogg's shares surged nearly 50% during premarket trading following the news [1].

Ferrero's chairman Giovanni Ferrero has been on an aggressive acquisition spree to diversify the company's portfolio beyond confectionery. The acquisition of WK Kellogg follows Ferrero's recent purchase of Wells Enterprises and Nestlé's US chocolate business [1]. Ferrero now operates 15 facilities across North America, employing over 5,100 people.

Meanwhile, MP Materials (NYSE:MP) has secured a multibillion-dollar public-private partnership with the U.S. Department of Defense to expand its rare earth capabilities and build a new magnet manufacturing facility. The agreement includes a $400 million equity investment from the Defense Department through the purchase of preferred stock, convertible at $30.03 per share [2]. The DoD has also committed to a $150 million loan to support expansion at MP Materials' Mountain Pass facility. Additionally, the company has received $1 billion in commitment letters from JPMorgan and Goldman Sachs to fund its second domestic magnet manufacturing facility, known as the 10X Facility [2].

The 10-year agreement with the Defense Department includes a price floor of $110 per kilogram for MP's NdPr product and guarantees 100% of magnet sales from the 10X Facility for a decade. The deal also includes warrants that could potentially make the DoD MP Materials' largest shareholder with a 15% stake [2].

These transactions underscore the continuing trend of consolidation in the food and beverage sector as companies seek to adapt to changing consumer preferences and market dynamics.

References:
[1] https://www.foodbev.com/news/ferrero-reportedly-nears-3bn-acquisition-of-wk-kellogg
[2] https://www.investing.com/news/stock-market-news/mp-materials-soars-on-multibilliondollar-deal-with-us-defense-department-93CH-4129576