M&M’s maker Mars is acquiring Kellanova, the company behind Cheez-Its and Pop-Tarts, in a deal worth nearly $30 billion, significantly expanding the range of well-known brands under one umbrella.
Kellanova was established last year following the split of the Kellogg Co. into two separate entities. Kellanova is responsible for selling many of the former company’s most profitable brands, such as Pringles, Eggo, Town House, MorningStar Farms, and Rice Krispies Treats. The company achieved net sales of over $13 billion in the previous year and employs approximately 23,000 individuals.
Mars Inc. announced on Wednesday that it will pay $83.50 per share in cash for the acquisition. The total value of the transaction, including debt, is estimated at $35.9 billion.
This acquisition represents the largest deal in the sector since J.M. Smucker’s acquisition of Hostess for $5.6 billion last year and is among the biggest of 2024, following Exxon Mobil’s $60 billion acquisition of Pioneer Natural Resources and Capital One Financial’s $35 billion deal with Discover Financial Services.
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The closing of Mars’ acquisition of Kellanova is expected in the first half of next year. Subsequently, Kellanova will become a part of Mars Snacking, with its corporate headquarters remaining in Chicago.
Mars, based in McLean, Virginia, is among the largest privately held companies in the U.S.
“The addition of the Kellanova brands significantly enhances our snacking portfolio, enabling us to better address consumer needs and drive profitable business growth,” stated Andrew Clarke, global president of Mars Snacking.
Arun Sundaram, an analyst at CFRA, described the potential combination as “a good fit” considering Mars’ innovation and brand-building prowess in conjunction with Kellanova’s global reach.
Sundaram anticipates scrutiny from U.S. antitrust regulators due to the current high food prices landscape but believes the deal will likely proceed given the minimal overlap between the companies’ product portfolios.
The acquisition will broaden Mars’ presence in the salty snack category, with the company being renowned for its chocolates, candies, and pet food offerings. Mars owns brands like Combos and Uncle Ben’s and is seeking growth opportunities in shifting snacking habits.
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Many companies are diversifying into salty snacks to cater to evolving American preferences. Hershey, for instance, acquired Amplify, the maker of Skinny Pop popcorn, for $1.2 billion in 2017 and later acquired Dot’s Homestyle Pretzels for the same amount.
The deal benefits Kellanova amidst rising prices impacting consumers and businesses, with the company having reduced prices by 1% in North America in the second quarter of this year.
The other company resulting from the Kellogg split, WK Kellogg Co., retained cereal brands like Raisin Bran, Frosted Flakes, and Froot Loops, which have faced sales slowdowns. WK Kellogg Co. is not involved in the transaction.
Mars, founded in 1911, commenced operations with buttercream candy made by Frank Mars from his home in Tacoma, Washington. The company relocated to Chicago in 1929 and introduced the Snickers bar in the subsequent year.
Through strategic acquisitions, Mars has expanded its portfolio over the years, venturing into pet food in 1935, ice cream with the purchase of Dove in 1986, and chewing gum by acquiring Wrigley in 2008 for $23 billion.
Shares of Kellanova surged nearly 8% in morning trading on Wednesday.
