Following recent rumours, US food giant Mars confirmed today that it has agreed a deal to acquire Kellanova, the owner of brands such as Pringles and Kellogg’s.
The offer for Kellanova is worth $83.50 per share in cash, for a total consideration of $35.9bn. The price represents a 33% premium to its closing price on 2 August when Reuters first reported that Mars was eyeing the company.
Kellanova, which previously made up Kellogg’s global snacking business, was created following the spin-off of the food giant’s North American cereal unit in a move to sharpen focus on each division. It also owns brands such as Cheez-It, Pop-Tarts, NutriGrain, RXBAR, Eggo and MorningStar Farms. Kellanova had net sales of more than $13bn last year, with a presence in 180 markets and approximately 23,000 employees.
Mars noted that Kellanova’s portfolio will complement its vast array of brands, which includes snacking and confectionery lines such as Snickers, M&M’S, Twix, Extra, and Kind. It also has a major Petcare division, with the total group generating net sales of more than $50bn in 2023.
The acquisition of Kellanova is Mars’s biggest deal ever, dwarfing its $23bn takeover of Wrigley in 2008. The company has been seeking to diversify its business through acquisitions amid the consumer shift to healthier products.
Poul Weihrauch, CEO and Office of the President of Mars, said: “In welcoming Kellanova’s portfolio of growing global brands, we have a substantial opportunity for Mars to further develop a sustainable snacking business that is fit for the future.
“We will honor the heritage and innovation behind Kellanova’s incredible snacking and food brands while combining our respective strengths to deliver more choice and innovation to consumers and customers. We have tremendous respect for the storied legacy that Kellanova has built and look forward to welcoming the Kellanova team.”
Steve Cahillane, Chairman, President and CEO of Kellanova, added: “This is a truly historic combination with a compelling cultural and strategic fit. Kellanova has been on a transformation journey to become the world’s best snacking company, and this opportunity to join Mars enables us to accelerate the realization of our full potential and our vision.
“We are excited for Kellanova’s next chapter as part of Mars, which will bring together both companies’ world-class talent and capabilities and our shared commitment to helping our communities thrive. With a proven track record of successfully and sustainably nurturing and growing acquired businesses, we are confident Mars is a natural home for the Kellanova brands and employees.”
The deal is subject to Kellanova shareholder approval and other closing conditions, including regulatory approvals, and is expected to close within the first half of 2025.
Legal experts have previously suggested that the acquisition is unlikely to face too many antitrust roadblocks due to the limited overlap between the offerings of the two companies.
Upon completion of the transaction, Kellanova will become part of the Mars Snacking division, led by Global President Andrew Clarke and headquartered in Chicago.
Mars stated that it intends to apply its “proven brand-building approach to further nurture and grow Kellanova’s brands, including accelerating innovation to meet evolving consumer tastes and preferences, investing locally to expand reach and introducing more better-for-you nutrition options to meet evolving consumer needs”.
NAM Implications:
- All it takes is a 33% premium on the share closing price on 2 August…
- …and a price of 3x annual sales that will need justifying.
- Therefore, rivals should anticipate extra vigour in the category under the new owners.
- A complementary and synergistic fit that should help Mars optimise its footprint.
- Watch this space…
