Kellogg Co., the more-than-century-old maker of breakfast cereal and Pop Tarts, surged the most since 2009 last week amid speculation it might become the industry’s next takeover target.
The company’s well-known products, including Frosted Flakes with cartoon pitchman Tony the Tiger, may entice billionaire Warren Buffett, who teamed up with 3G Capital last year to acquire H.J. Heinz & Co., said Gardner Russo & Gardner.
Kellogg meets several of Buffett’s financial criteria for acquisitions.
With an enterprise value of $30 billion, Kellogg would surpass Heinz as the biggest food company purchase on record, according to data compiled by Bloomberg.
That may not deter Buffett, who said in his latest letter to Berkshire Hathaway’s shareholders that he’s still looking for big targets.
Kellogg also may appeal to PepsiCo Inc., owner of Quaker oatmeal, or Nestle SA, said Edward Jones & Co.
“They have some very rock-solid brands with a lot of market share,” said Brian Yarbrough, a St. Louis-based analyst at Edward Jones. “Just because it’s a big company doesn’t mean you can’t get a deal done. The whole gamut, from private-equity players all the way down to other food companies, could see value in potentially doing it.”
Kris Charles, of Battle Creek, Mich.-based Kellogg, said the company doesn’t respond to speculation. A representative for 3G declined to comment, and Buffett didn’t respond to a request to comment sent to an assistant.
Berkshire owns The Buffalo News, and Buffett is the newspaper’s chairman.