Ferrero and Hostess vie for Kellogg's Keebler cookie business, in a roughly $1.5 billion deal

Hostess Brands and Nutella-owner Ferrero are competing as front-runners to buy Kellogg's Keebler, Famous Amos and fruit snacks businesses, in a deal that could value the brands at roughly $1.5 billion, people familiar with the situation tell CNBC.

Hostess, which has a market capitalization of $1.2 billion, is considering acquiring the Keebler cookie business through a"Reverse Morris Trust," said the people. The Reverse Morris Trust or RMT is an unusual deal structure that allows for a tax-efficient combination of two similarly sized companies.

Shares of Kellogg, which has a market capitalization of $19.5 billion, have fallen 11 percent over the past year. Kellogg executives have pointed to Pringles, Cheez-Its and Rice Krispies Treats as brands it can revive with innovation and single-serve options. Companies like Ferrero have shown how new attention can breathe life into previously neglected brands. Products like sweets and snacks, which still appeal to today's on-the-go consumer, have proven particularly amenable to renovation.

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