18 Aug 2024 Mars to buy Kellanova in $36-billion mega deal
In a mega-merger, Mars will acquire Kellanova for an eye-watering $35.9-billion in cash, tying together some of the largest US candy and snack brands, the companies announced on August 15, 2024.
The family-owned Mars − home to Snickers, Skittles and M&M’s − will pay $83.50 per share in an all-cash deal for Kellanova. Other notable brands under the Kellanova umbrella include Pringles, Eggo, Cheez-It, Club Crackers and Pop-Tarts.
This is the biggest ever acquisition for Mars, dwarfing its $23bn takeover of the chewing gum maker Wrigley in 2008.
“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,” Poul Weihrauch, CEO of Mars, said in a statement.
“We will honour 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.”
The move comes after Kellogg separated its business last year, with its cereal segment trading under WK Kellogg Co, and the remaining snacking and plant-based brands under Kellanova.
Kellanova stats: The 100+ year-old business has about 23 000 employees and booked annual sales of $13bn across 180 international markets in 2023. It boasts two billion-dollar brands.
Mars stats: The 100+ year-old business has about 150 000 employees and booked annual sales of $50bn in 2023. It boasts 15 billion-dollar brands.
Timeous move
Mars’ buyout aims to create a “broader, global snacking business” through recognised and popular brands, Andrew Clarke, global president of Mars Snacking, said.
After years of high inflation, some consumers are pulling back on spending and struggling to afford brand-name snacks, making acquisitions more attractive. Many grocers have leaned into private-label options to entice consumers who are looking for value.
“It’s our job as a business to try and absolve as much of these input costs as possible and put on as little as required to the consumers,” Weihrauch told CNBC. “We believe that coming together will make us stronger in absolving these shocks.”
Weihrauch said there is opportunity in places like China and Africa for the two companies to grow together. Mars has a larger business in China and Kellanova is stronger in Africa.
The merger comes as food brands also look for ways to help offset global government action to control the marketing of high fat, salt and sugar snacks, as well as the expected hit on demand because of the increasing popularity of weight-loss drugs.
Kellanova helps Mars diversify its chocolate-heavy portfolio of brands, which are seen as more vulnerable to falling demand, with savoury snacks and treats with a healthier image, such as NutriGrain, while giving it more exposure to international markets.
The acquisition could spark antitrust questions, particularly due to overlap in the candy bars category, an issue not worrying the key players.
Kellanova CEO Steve Cahillane said he doesn’t foresee any antitrust issues, while Weihrauch asserted the brands are complementary, and the company will collaborate with regulators.
“If you just take a stroll down the aisle in a supermarket of the bars, it is an incredibly fragmented space with lots of choice for consumers,” Cahillane said.
The transaction is expected to close in the first half of 2025, according to the press release.
Source: Mars, CNBC, The Guardian
Additional reading:
Kellanova CEO says purchase by Mars will spark innovation – great read and insights on the deal from FoodDive.com …. CLICK HERE