Mars, maker of M&M’s and Snickers, plans $30 billion deal for Kellanova

Mars, the well-known maker of M&M’s, has announced a significant acquisition, agreeing to purchase Kellanova for nearly $30 billion. This deal is one of the largest in the food industry and broadens Mars’ brand portfolio to encompass not just candies but also salty snacks, including popular items like Pringles and Cheez-It.

Kellanova was established last year following the split of Kellogg Co. into three separate entities. The newly formed Kellanova retains many of Kellogg’s most lucrative brands. These include iconic names such as Eggo, Town House, MorningStar Farms, and Rice Krispies Treats. The company reported over $13 billion in net sales last year and employs around 23,000 people.

This acquisition marks a pivotal move for Mars, allowing the company to extend its footprint into the salty snacks sector. Although Mars owns brands like Combos and Uncle Ben’s, it is primarily recognized for its wide range of chocolates, candies, and pet food products. Among its offerings are M&M’s, Lifesavers, Juicy Fruit gum, and Skittles, alongside renowned pet food brands like Pedigree and Royal Canin.

However, in recent years, sales of certain products, particularly gum, have struggled as consumer snacking habits evolve. This acquisition will enable Mars to tap into growth areas more effectively.

Neil Saunders, managing director of GlobalData, noted, “There is significant logic behind Mars acquiring Kellanova, not least because the deal would allow Mars to push more heavily into the savory snacks category where it has virtually no presence. Savory snacks sales are growing at a faster clip than confectionery, where Mars currently predominates.”

The agreement is notable as the largest in the sector since the $5.6 billion acquisition of Hostess by J.M. Smucker last year. It is also among the most substantial deals expected in 2024, second only to ExxonMobil’s $60 billion acquisition of Pioneer Natural Resources.

Andrew Clarke, global president of Mars Snacking, expressed enthusiasm about the acquisition, saying, “The Kellanova brands significantly expand our snacking platform, allowing us to even more effectively meet consumer needs and drive profitable business growth.”

Mars Inc. has stated that they will pay $83.50 per share in cash for Kellanova, valuing the entire transaction at approximately $35.9 billion, including debt. Following this announcement, Kellanova’s stock price surged by $5.50, or 7.4%, reaching $80.00 in morning trading.

Headquartered in McLean, Virginia, Mars is one of the largest privately held companies in the United States. The acquisition of Kellanova is anticipated to be finalized in the first half of the coming year. Once complete, Kellanova will be integrated into Mars Snacking, with its corporate headquarters remaining in Chicago.

The split company, WK Kellogg Co., retained several cereal brands such as Raisin Bran, Frosted Flakes, and Froot Loops. However, these brands have faced challenges due to declining sales and are not part of the merger.

The merger comes at a strategic time, as rising prices have begun to strain consumer budgets. Many companies are now under pressure to restrain price increases. Economists note that consumer behavior is gradually returning to pre-pandemic norms, where price hikes could deter business.

Mars has a long history, dating back to 1911 when founder Frank Mars started making butter cream candy in his Tacoma, Washington home. The company relocated to Chicago in 1929 and introduced its iconic Snickers bar the following year.

Known for its growth through acquisitions, Mars ventured into the pet food industry in 1935 with the acquisition of a U.K. dog food brand and added Dove ice cream to its portfolio in 1986. In a major move in 2008, Mars purchased the Wrigley chewing gum brand for $23 billion.