USA – Mars Inc., the family-owned giant known for its iconic candy brands such as Snickers and M&M’s, is reportedly considering a major acquisition of Kellanova, the manufacturer behind popular snacks like Cheez-It and Pringles.
This potential deal, which could be valued at approximately US$27 billion including debt, would mark one of the largest transactions in the packaged food sector to date, according to sources familiar with the situation.
The exploration of this acquisition comes in light of Kellanova’s recent performance. Since its split from WK Kellogg Co. last October, Kellanova’s shares have surged by about 20%.
However, they are still trading at a discount compared to competitors like Hershey and Mondelez International.
This valuation disparity makes Kellanova an attractive target for acquisition, as noted by industry analysts.
Despite the interest from Mars, there is no guarantee that Kellanova will engage in negotiations. Sources indicate that other potential buyers may also emerge, and it remains possible that no deal will materialize.
Kellanova has declined to comment on the matter, while representatives from Mars have not responded to inquiries regarding the potential acquisition.
The backdrop for this potential merger reflects a broader trend in the packaged food industry, where companies are increasingly seeking scale to navigate challenges such as rising prices and changing consumer demands.
Food prices have risen by 25% between 2019 and 2023, outpacing other consumer goods, according to the U.S. Department of Agriculture. As a result, companies are looking to consolidate to enhance their market positions.
Recent mergers in the sector highlight this trend. For instance, J.M. Smucker’s US$5.6 billion acquisition of Hostess Brands last year united two significant players in the American snack market.
However, many recent deals have been smaller in scale compared to the landmark merger between Heinz and Kraft nearly a decade ago, as U.S. antitrust regulators have grown increasingly wary of transactions that could lead to higher prices and reduced consumer choices.
If Mars successfully acquires Kellanova, it would represent the company’s largest deal to date, surpassing its US$9.1 billion acquisition of veterinary hospital operator VCA in 2017.
Mars, headquartered in McLean, Virginia, generates approximately US$47 billion in annual sales and operates under three divisions: Mars Petcare, Mars Snacking, and Mars Food & Nutrition. The company’s ownership lies with the descendants of its founder, Frank C. Mars.
Kellanova, which produces its products in 21 countries and markets them in over 180 countries, emerged as a standalone entity following its separation from WK Kellogg.
This split allowed Kellanova to focus on its diverse portfolio, including snacks, frozen breakfast foods such as Morningstar Farms and Eggo, and an international cereal division.
WK Kellogg retained the North American cereal business, which includes well-known brands like Kellogg’s and Froot Loops.
In addition to Mars’s interest, investment firm TOMS Capital has recently taken a significant stake in Kellanova and is reportedly discussing strategies to enhance shareholder returns.
This investment could influence Kellanova’s decision-making process as it navigates potential acquisition offers.
As the packaged food industry continues to evolve, the potential acquisition of Kellanova by Mars could reshape the competitive landscape, reflecting the ongoing trend of consolidation in response to market pressures.
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