Mars Eyes $27 Billion Acquisition of Snack Giant Kellanova

Family-owned packaged food giant Mars, known for its iconic candy brands such as M&M’s and Snickers, is reportedly exploring a potential acquisition of Kellanova K.N., the maker of popular snacks like Cheez-It and Pringles, according to sources familiar with the matter.

A deal of this magnitude would be one of the largest ever in the packaged food sector, given Kellanova’s market value of approximately $27 billion, including debt, per Reuters. Such a transaction would undoubtedly test the regulatory environment’s willingness to allow further consolidation in the sector. Since Kellanova’s split from WK Kellogg last October, its shares have risen about 20%. However, the company’s stock still trades at a discount compared to peers like Hershey and Mondelez International, making it an attractive acquisition target.

According to Reuters, there is no certainty that Kellanova will proceed with a deal involving Mars. The sources indicated that other potential suitors might approach Kellanova, and there is a possibility that no agreement will be reached with any party. These sources requested anonymity due to the confidential nature of the discussions.

The packaged food sector has seen robust dealmaking as companies strive for scale to mitigate the impacts of price inflation and the effect of weight-loss drugs on demand. Last year, J.M. Smucker acquired Twinkies maker Hostess Brands for $5.6 billion, uniting two major American snack producers. However, many deals have been smaller in scale compared to the mega-merger between Heinz and Kraft almost a decade ago, as U.S. antitrust regulators have become increasingly concerned about such transactions leading to higher prices and fewer choices for consumers.

Food prices have surged by 25% between 2019 and 2023, outpacing other consumer goods and services, according to recent statistics from the U.S. Department of Agriculture.

Source: Reuters