Short Squeeze Alert? Kellogg Receives $3 Billion Buyout Offer from Ferrero, Shares Surge 50% Pre-Market

TradingKey - Italian food giant Ferrero Group is advancing a nearly $3 billion acquisition proposal for U.S. cereal and snack giant Kellogg (KLG.US), according to sources.

Sparked by the news, Kellogg’s shares jumped as much as 56% in after-hours trading to $27.38, pushing its market cap above $2.2 billion. Insiders say the deal could be finalized as early as this week, though negotiations are still ongoing.

After-hours price chart of WK Kellogg Co, source: Investing.com

The potential takeover could deliver a heavy blow to short sellers. Data shows that short interest in WK Kellogg stock currently stands at 12.6% of the float — a relatively high level. If the deal goes through, it may trigger a wave of short covering, further amplifying share price volatility.

Market analysts believe that Kellogg’s strong brand equity and distribution network would significantly enhance Ferrero’s product portfolio, helping the luxury confectionery company expand into the mass-market health food space.