Nutella-maker Ferrero to gobble up cereal giant Kellogg for $3.1 billion

American cereal giant Kellogg and Italian candy giant Ferrero have struck a sweet deal worth $3.1 billion.

Ferrero, the family-owned maker of Nutella, has agreed to buy the iconic American maker of Froot Loops and Frosted Flakes, combining two of the world’s most storied sweet brands.

“Joining Ferrero will provide WK Kellogg Co with greater resources and more flexibility to grow our iconic brands in this competitive and dynamic market,” WK Kellogg CEO Gary Pilnick said in a statement.

Rapidly changing consumer habits are the context for this deal, as U.S. shoppers are increasingly either looking to store-brand snacks and cereals in search of a deal or reaching for heathier choices. Kellogg is also working to phase out artificial dyes from its products.

The company in May reported a decline in sales and lowered its financial forecast for the year. Its new deal with Ferrero will face reviews by Kellogg’s shareholders as well as federal regulators.

Ferrero was founded in Italy nearly 80 years ago and has lately been on a quest to expand its American reach. The company has bought ice cream company Wells Enterprises, known for Blue Bunny and Halo Top brands, in addition to Nestle’s American chocolate business, which includes Butterfinger and Raisinets.

“Over recent years, Ferrero has expanded its presence in North America, bringing together our well-known brands from around the world with local jewels rooted in the U.S. Today’s news is a key milestone in that journey,” Giovanni Ferrero, executive chairman of the Ferrero Group, said in a statement on Thursday.

Kellogg’s parent company first split about two years ago, spinning off its North American cereal business (with Rice Krispies and Kashi) into WK Kellogg. The other half, the snacking business (with Cheez-Its and Pop-Tarts), was last year sold to Virginia-based Mars (with M&Ms and Juicy Fruit) in a massive $30 billion deal.