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Mars, the confectionery, food and petcare giant, has reached an agreement to acquire Pringles and Pop-Tarts maker Kellanova for total consideration of $35.9bn, marking one of the largest deals of the year.
The US conglomerate, known for sugary snacks such as M&M’s, Snickers and Skittles, agreed to pay $83.50 per share for Kellanova in an all-cash transaction and will also take on more than $6bn in net debt.
The offer made by the privately held company represents a more than 69 per cent premium to where Kellanova’s shares were trading just a few months ago.
The price Mars is offering to pay is unusually high in the consumer sector, especially for a company making products that have fallen out of favour with health-conscious customers.
Mars said that it would finance the acquisition through a combination of cash-on-hand and new debt it had already secured.
Mars’s acquisition also comes as consumers have recently reduced their spending following several years of inflation, which has pushed prices for many staples above pre-pandemic levels.
However, Kellanova has so far managed to navigate the slowdown in US consumer spending and it recently raised its full-year sales forecasts after exceeding expectations with its latest earnings.
Mars said that the deal would help to diversify its business by adding more salty snacks. The acquisition will also allow it to add Kellanova brands to a broad global distribution network.
“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,” said Poul Weihrauch, chief executive of Mars.
The New York-listed company, which also makes Cheez-It, Rice Krispies Treats and Eggo, was created in 2023 after Kellogg separated its breakfast cereals and snacks businesses. The division under Mars will be led by Andrew Clarke, global president of Mars snacking.
Mars, one of the world’s largest family-owned businesses, boasts annual sales exceeding $50bn and a workforce of more than 150,000 employees.
The deal will probably face significant antitrust hurdles as competition watchdogs appointed by US President Joe Biden’s administration have been aggressively challenging big mergers and acquisitions. Mars said it hoped to complete the deal within the first half of 2025.
Dealmaking has slowed sharply over the past few years, although it has started picking up in recent months. If Mars’s acquisition of Kellanova is approved it is likely to usher a new wave of deals in the sector.
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