Salty and sweet finger foods Mega-agreement unites Cheez-Its and M&Ms
Mars has agreed to pay nearly $29 billion to acquire Kellanova, the company behind Pringles and Cheez-Its.
Making Snickers, M&Ms, and the Mars bar, Mars will pay $83.50 in cash per share to Kellanova’s shareholders, according to a regulatory filing.
In pre-market trading, shares of Kellanova (K), a company formed last year when Kellogg Company split its cereal and snack divisions, increased by more than 8%. Because of better-than-expected profits and the early August news of merger talks, the stock has increased by almost 28% so far this month.
Kellanova, which also produces vegan and vegetarian cuisine from MorningStar Farms, Pop-Tarts, and Eggo, increased its sales projection earlier this month following the release of impressive first-half statistics.
One of the largest takeovers of the year, the acquisition was announced on Wednesday, coincides with customers becoming more health-conscious, which is driving food companies like Nestle to create products that assist consumers in controlling their weight.
Additionally, as inflation and high interest rates dig into consumers’ budgets, they are spending less on non-essential items, which is harming sales at companies like McDonald’s (MCD), Burger King, and Starbucks (SBUX).
Dealogic lists the Kellanova transaction as one of the top 10 global mergers and acquisitions in the food and beverage industry since 1995. This year’s fourth-largest M&A transaction to date is this one.
With over 150,000 employees worldwide and yearly sales over $50 billion, the family-owned company Mars has been on a purchasing binge in recent years. 2020 saw the acquisition of Kind Bars and then Nature’s Bakery. It acquired Trü Frü, a company that produces fruit snacks coated in chocolate, two years later. Additionally, it invested almost half a billion dollars in the upscale British chocolate manufacturer Hotel Chocolat last year.
Mars to pay $36 billion to purchase Kellanova, the creator of Pringles and Cheez-It.
The largest transaction in the packaged food sector, involving the purchase of Cheez-It and Pringles producer Kellanova for around $36 billion, was announced on Wednesday by family-owned candy giant Mars, whose brands include M&M’s and Snickers.
In an all-cash agreement, Mars will pay $83.50 per share for Kellanova, which is almost 33% more than the company’s closing price on August 2—the day before Reuters revealed that Mars was considering a purchase of the Pringles manufacturer.
Before the bell, Kellanova’s stock increased by around 8% to $80.45. A Reuters assessment places its value at $28.58 billion on an equity basis.
The agreement is made at a time when budget-conscious consumers are choosing less expensive private labels over more expensive branded products, which is slowing the growth of sales at US packaged food businesses like Kraft Heinz, Mondelez, and Hershey.
The agreement dwarfs Mars’ $23 billion acquisition of Wrigley in 2008 and would combine a number of well-known consumer brands under one roof, combining Kellanova’s snack portfolio, which includes Pop-Tarts, Rice Krispies Treats, and Eggo frozen waffles, with Mars’ Twix, Bounty, and Milky Way chocolates.
The modest overlap between the two companies‘ offerings means that the acquisition is unlikely to encounter many antitrust obstacles, legal experts told Reuters.
After the deal closes in the first half of 2025, Kellanova will join Mars Snacking, which is situated in Chicago and is run by Global President Andrew Clarke, according to the firms.
Kellanova is a salty snack company that sold cereal outside of North America when it broke away from WK Kellogg in October of last year. The original parent firm, Kellogg, retained its cereal business in North America, which was acquired by WK Kellogg.
In 2023, Kellanova recorded net revenues exceeding $13 billion.
The terms of the sale were first announced earlier on Tuesday by The Wall Street Journal.
