Goldman Conflict Claims in WK Kellogg-Ferrero Deal Draw Lawsuit

WK Kellogg Co. needs to disclose more about any potential conflict its financial adviser has from a deal with the cereal-maker’s former company, a shareholder lawsuit said.

Goldman Sachs & Co. provided a fairness opinion of the proposed$3.1 billion acquisition by Ferrero International SA, so Kellogg’s preliminary statement soliciting shareholders’ views was supposed to describe any of the bank’s pertinent relationships from the past two years, said the complaint filed in the US District Court for the Northern District of Illinois. The initial proxy was misleading because it didn’t include the amount of money Goldman’s supposed to make off of affiliate Kellanova’s $36 billion sale, said the Aug. 8 complaint.

It’s particularly important this information is clarified because Goldman allegedly reiterated its fairness opinion without recalculating valuation analyses derived from problematic information, shareholder George Konel said. Kellogg said in July it would restate 2024 financials after overstating the costs of goods sold and understated inventory.

The cereal maker spun off from the snacking company now called Kellanova in 2023. Kellanova announced it would be acquired by Mars Inc. in 2024. Under terms disclosed to regulators, Goldman as Kellanova’s financial adviser would get a transaction fee of $93.2 million when the merger finished, with $5 million of that paid upon the announcement.

Kellogg’s proxy identified the pending Kellanova deal as a source of pay to Goldman and that the financial adviser “recognized” $22 million for services to Kellogg Foundation Trust since mid-2023—tracking with the $18-20 million that Goldman would get from the Ferrero deal, Konel said. But the paperwork excluded the pay Goldman’s supposed to get when the Mars-Kellanova deal completes, which “substantially dwarfs the $22 million that Goldman Sachs has ‘recognized’ during the two-year period ended July 10, 2025,” Konel said.

Kellogg shouldn’t “arbitrarily” exclude the expected compensation Goldman’s supposed to get, Konel said. Kellogg Foundation Trust, Kellogg CEO Gary Pilnick, and director Zack Gund are affiliates of both the company and Kellanova, Konel said.

Ademi & Fruchter LLP represents Konel, who wants the court to hold up the deal until Kellogg discloses more information about Goldman’s relationship. If the deal goes through, Konel wants damages for alleged Securities Exchange Act of 1934 violations by the company and board members.

Kellogg declined to comment. Goldman, which is not party to the suit, didn’t immediately respond to an email seeking comment.

The case is Konel v. WK Kellogg Co., N.D. Ill., No. 1:25-cv-09418, complaint filed 8/8/25.