Snickers and Pringles Manufacturers Announce $36 Billion Merger
Mars to Acquire Kellanova in $36 Billion Food Industry Deal.
Mars, the company behind popular candies like M&M’s and Snickers, has announced a major acquisition of Kellanova, a snack food business spun off by Kellogg’s last year. The all-cash deal, valued at $35.9 billion including debt, is one of the largest food industry deals in recent years and aims to create a new global food giant.
Kellanova, known for brands such as Cheez-It, Pringles, and Eggo, will complement Mars' existing portfolio. Mars, which is privately owned, has been diversifying beyond its core chocolate business, including the acquisition of Kind North America in 2020 and significant investments in its pet business.
Poul Weihrauch, Mars' chief executive, stated that the acquisition presents a substantial opportunity for Mars to develop a sustainable snacking business.
The deal occurs amid challenging times for food manufacturers, who have been increasing product prices to cover rising commodity and labor costs. This has led to slower revenue growth and fewer items sold as consumers push back by buying less or opting for generic brands. Kellanova has been increasing promotions to attract price-sensitive shoppers, especially those earning $100,000 or less with children.
Kellanova reported a 4 percent increase in organic net sales for the quarter ending in June, with North American volumes growing by 2 percent. Created from Kellogg’s spin-off of its North American cereal business, Kellanova operates in 180 markets and generated over $13 billion in revenue last year.
The deal, expected to close in the first half of next year, could draw regulatory scrutiny given the current administration's stance on corporate consolidation. However, analysts from Jefferies noted minimal overlap between the companies' product lines, which could limit potential regulatory roadblocks.
Following the announcement, shares of Kellanova rose but remained slightly below the $83.50 per share price offered by Mars, indicating some uncertainty about the deal's completion.
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