Mars Will Acquire Kellanova for $36 Billion
The rumors are true. Mars announced today it is acquiring Kellogg spinoff Kellanova for $35.9 billion, the largest transaction ever in the food & beverage space. The deal immediately will make Mars, which had only a few snack products in its portfolio, one of the world’s largest snack providers.
Mars will pay Kellanova shareholders $83.50 per share in cash, a premium of 44% to Kellanova’s 30 trading price and 33% above its 52-week high reached on Aug. 2. That values the company at about $29 billion, less its debt that Mars is taking on. Mars intends to fully finance the acquisition through a combination of cash on hand and new debt, for which commitments have been secured.
Kellanova of course is the snacking half of the former Kellogg Co., which split into two in October of last year. While WK Kellogg Co retained domestic cereals, Kellanova got snacks such as Pringles, Cheez-It, Rice Krispie Treats and Pop-Tarts, as well as frozen breakfast foods and the international cereal business. Kellanova had 2023 sales of just over $13 billion and net income of $951 million.
Mars, with an estimated $45 billion in sales, has moved away from its chocolate and candy roots to where pet food and pet care is now the biggest part of the business. Outside of its confectionery brands, which it includes in its “snacking” category, Mars owns Combos, Tru Fru, Kind granola bars and Nature’s Bakery – the last three acquired since November of 2020. The company is entirely owned by the Mars family.
Snacking is a large, attractive, and durable category that continues to grow in importance with consumers, today’s Mars news release said. Upon completion of the transaction, Kellanova will become part of Mars Snacking, led by Global President Andrew Clarke and headquartered in Chicago – which is where Kellanova decided to locate after the split with WK Kellogg Co.
“The addition of Kellanova provides Mars Snacking with entry into new attractive snacking categories,” the news release continued. “It will add two new billion-dollar brands – Pringles and Cheez-It – to the Mars business. It will also expand the Mars health & wellness snacking portfolio with the addition of new complementary products like RxBar and NutriGrain.”
“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, CEO and office of the president of Mars. “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.”
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.”
The deal has been unanimously approved by the board of directors of Kellanova, but it still requires Kellanova shareholder approval and other customary closing conditions.
