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.

The deal talks come as Hostess and Ferrero look to take advantage of a shakeup across the food industry. Big Food companies are shedding brands that were neglected in favor of focusing on moneymakers. Companies like Hostess and Ferrero are placing a bet they can revive those brands with proper investment and focus.

Both Hostess and Ferrero put in final offers for the cookie and fruit snacks brands on Thursday. Other brands up for sale include Murray and Mother's cookies and Stretch Island fruit snacks. While other buyers are still in contention, the two are viewed as front-runners, the people said. Any deal is still more than a week away, they said.

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.

The talks come as food companies including Kellogg, Campbell and Kraft Heinz are paring back their portfolios to focus resources on brands the companies can revive. Sales growth has stalled across the industry, and food giants are pouring more targeted efforts into fending off upstart on-trend competitors like Kind Bar and Beanitos chips. Simple scale and cost efficiencies are no longer the goal for Big Food brands.

"We need to make strategic choices about our business and these brands have had difficulty competing for resources and investments within our portfolio," Kellogg CEO Steve Cahillane said in a statement last year, when announcing the planned divestitures.

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.

Other Big Food brands potentially up for grabs include Kraft Heinz's Maxwell House coffee and Breakstone's cottage cheese business, which CNBC has reported the ketchup giant is considering selling. General Mills and Conagra have also said they are considering divestitures.

Kellogg competitor Campbell Soup is nearing the end of another cookie deal.



In its efforts to slim its portfolio, Campbell is selling its U.S. fresh food and international business, including Australian cookie and biscuit business Arnott's. The international unit, valued at roughly $3 billion, received final offers last week, people tell CNBC. Oreo-owner Mondelez is seen as a front-runner for the business, they said, cautioning Mondelez still faces competition from other companies, as well as potential anti-trust concerns.

Kellogg acquired Keebler in 2001 for $4.4 billion. At the time, part of its draw was the cookie brand's "direct-store delivery" platform, through which employees place the company's own products in stores, rather than ship from warehouses. So-called DSD gives a food company more control over ensuring proper display in grocery and convenience stores. But as in-store sales of products like cookies have fallen, it is less economical. Kellogg has since dropped DSD distribution.