July 9 (Reuters) - The Italian candy maker behind Ferrero Rocher and Nutella is nearing a deal to buy cereal maker WK Kellogg KLG.N, a source told Reuters, an acquisition that would combine two of the world's best known consumer food makers.

WK Kellogg shares soared 58% in overnight trading.

Shares of WK Kellogg — the company behind Froot Loops and Frosted Flakes — surged about 55% in extended trading, after the Wall Street Journal on Wednesday reported that Ferrero could finalize the roughly $3 billion deal as soon as this week. WK Kellogg currently has a market value of about $1.5 billion.

The companies did not immediately respond to Reuters' requests for comment.

WK Kellogg has been struggling with weak demand and declining sales as inflation-weary consumers trade down from its higher-priced cereals. It has also come under scrutiny for its use of artificial food dyes in some of its cereals. The company recently said it met with Health Secretary Robert F. Kennedy Jr. and is reformulating its cereals served in schools to not include artificial dyes.

"For Ferrero, this deal presents an opportunity to diversify beyond confectionery and deepen its presence in the U.S. market," said Arun Sundaram, analyst with CFRA Research. "Since the spinoff and rebrand from Kellogg Company, both WK Kellogg and Kellanova have delivered shareholder value by becoming acquisition targets," he said.

Kellanova K.N, which agreed to sell itself to Snickers owner Mars in a $36 billion deal last year, also posted bleak quarterly results after struggling to lift sales in key markets such as the United States.