Mars, the family-owned conglomerate known for its iconic brands like M&M's and Snickers, has announced its acquisition of Kellanova, the maker of Cheez-It and Pringles, for a staggering $36 billion. This acquisition marks one of the largest in the industry's history, merging two giants in the snack food sector and bringing together an impressive array of household names under one corporate umbrella.
Mars has agreed to pay $83.50 per share for Kellanova, representing a 33% premium over its closing price prior to the announcement. The deal is expected to close in the first half of 2025, pending regulatory approval, and will significantly bolster Mars' position in the U.S. snacking market, where the company currently holds a 4.54% share. Kellanova, which was spun off from cereal giant Kellogg last year, holds a 3.9% market share, making the combined entity a formidable player in the snack food industry, second only to PepsiCo.
The strategic move by Mars comes at a time when the packaged food sector is undergoing significant shifts. Rising inflation has driven consumers toward cheaper, private-label brands, while the growing popularity of weight-loss drugs like Ozempic and Wegovy, which suppress appetite, has raised concerns about declining sales in the snacking industry. Despite these challenges, Mars sees the acquisition as an opportunity to strengthen its snacking division, expand its product offerings, and introduce healthier options in response to changing consumer preferences.
"Mars is committed to investing locally and broadening our portfolio with more health-conscious options," the company stated. "This acquisition underscores our belief in the durability and attractiveness of the snacking category, even in a rapidly changing market."
Legal experts have suggested that the deal is unlikely to face significant antitrust hurdles due to the limited overlap in the product offerings of Mars and Kellanova. The acquisition dwarfs Mars' previous major purchase of Wrigley for $23 billion in 2008 and reflects the company's ongoing strategy to diversify and grow its global presence in the snacking sector.
Upon completion of the acquisition, Kellanova will be integrated into Mars Snacking, with operations led by Global President Andrew Clarke. The newly acquired brands will be headquartered in Chicago, continuing Kellanova's legacy while benefiting from Mars' expansive resources and market reach.
Kellanova, which sells cereal products outside North America and is rooted in the salty snacks business, had recently undergone significant restructuring. The company's split from WK Kellogg last October was seen as a strategic move to streamline operations and focus on its faster-growing segments. Arun Sundaram, an analyst at CFRA Research, noted that this restructuring likely made Kellanova an attractive acquisition target. "It's now clear why Kellanova spun off its slower-growing domestic cereal business last year," Sundaram remarked. "We may see more packaged food companies divest or spin off slower-growing segments to attract new buyers."
The acquisition also comes with significant financial commitments. Mars has agreed to a termination fee of $1.25 billion if the deal fails to obtain regulatory approvals, while Kellanova will owe $800 million to Mars if its board changes its recommendation on the deal. Mars plans to finance the acquisition through a combination of cash reserves and new debt, with Citi acting as its financial adviser and Goldman Sachs advising Kellanova.
