In a landmark $36 billion acquisition, Kellanova, the maker of Cheez-It and Pringles, is set to be acquired by family-owned candy giant Mars. This deal unites iconic consumer food brands, including M&M's, Snickers, Pop-Tarts, and Pringles, creating one of the largest transactions in the food industry.
Mars announced on Wednesday that it will pay $83.50 per share for Kellanova, a 33% premium over its closing price on August 2, prior to the news of the potential deal being reported by Reuters. This acquisition highlights the broader trend in the U.S. packaged food sector, where companies are pursuing mergers and acquisitions to scale up and counteract the effects of consumers gravitating toward more affordable private label brands amid rising prices.
The deal comes at a time when investors express concerns over a potential decline in sales, driven by the increasing popularity of weight-loss drugs like Ozempic and Wegovy, which could suppress appetite and reduce overall consumption.
Mars emphasized its strategy to enhance its snacking division through this acquisition, with plans to invest locally and introduce healthier product options. The company sees the snacking category as both "attractive and durable," aiming to expand its market presence. Currently, Mars holds a 4.54% share of the U.S. snacking market, while Kellanova accounts for about 3.9%, according to GlobalData, placing both companies behind market leader PepsiCo.
This acquisition surpasses Mars' $23 billion takeover of Wrigley in 2008 and is expected to encounter minimal antitrust challenges due to the limited overlap between the two companies' product offerings, according to legal experts.
Upon completion of the deal in the first half of 2025, Kellanova will integrate into Mars Snacking, led by Global President Andrew Clarke, and will be headquartered in Chicago. The announcement led to a 7.4% rise in Kellanova’s shares, valuing the company at approximately $28.58 billion.
Kellanova, which separated from WK Kellogg last October, focuses on salty snacks and cereal sales outside of North America. WK Kellogg retained the North American cereal business. According to CFRA Research’s Arun Sundaram, "It’s now clear why Kellanova went through the spin-off of its slow-growing domestic cereal business last year. We may see more packaged food companies divest or spin off slower-growing segments of their portfolios to attract new buyers."
Mars plans to finance the acquisition through a combination of cash and new debt, with Citi serving as its financial adviser. Goldman Sachs is advising Kellanova. The deal also includes a termination fee clause, requiring Mars to pay $1.25 billion if regulatory approvals are not secured, while Kellanova would owe Mars $800 million in the event of a change in board recommendation.
(Source:www.marketscreener.com)
Mars announced on Wednesday that it will pay $83.50 per share for Kellanova, a 33% premium over its closing price on August 2, prior to the news of the potential deal being reported by Reuters. This acquisition highlights the broader trend in the U.S. packaged food sector, where companies are pursuing mergers and acquisitions to scale up and counteract the effects of consumers gravitating toward more affordable private label brands amid rising prices.
The deal comes at a time when investors express concerns over a potential decline in sales, driven by the increasing popularity of weight-loss drugs like Ozempic and Wegovy, which could suppress appetite and reduce overall consumption.
Mars emphasized its strategy to enhance its snacking division through this acquisition, with plans to invest locally and introduce healthier product options. The company sees the snacking category as both "attractive and durable," aiming to expand its market presence. Currently, Mars holds a 4.54% share of the U.S. snacking market, while Kellanova accounts for about 3.9%, according to GlobalData, placing both companies behind market leader PepsiCo.
This acquisition surpasses Mars' $23 billion takeover of Wrigley in 2008 and is expected to encounter minimal antitrust challenges due to the limited overlap between the two companies' product offerings, according to legal experts.
Upon completion of the deal in the first half of 2025, Kellanova will integrate into Mars Snacking, led by Global President Andrew Clarke, and will be headquartered in Chicago. The announcement led to a 7.4% rise in Kellanova’s shares, valuing the company at approximately $28.58 billion.
Kellanova, which separated from WK Kellogg last October, focuses on salty snacks and cereal sales outside of North America. WK Kellogg retained the North American cereal business. According to CFRA Research’s Arun Sundaram, "It’s now clear why Kellanova went through the spin-off of its slow-growing domestic cereal business last year. We may see more packaged food companies divest or spin off slower-growing segments of their portfolios to attract new buyers."
Mars plans to finance the acquisition through a combination of cash and new debt, with Citi serving as its financial adviser. Goldman Sachs is advising Kellanova. The deal also includes a termination fee clause, requiring Mars to pay $1.25 billion if regulatory approvals are not secured, while Kellanova would owe Mars $800 million in the event of a change in board recommendation.
(Source:www.marketscreener.com)