Mars, the owner of M&M, is set to acquire Kellanova, a spinoff company from Kellogg, for $35.9 billion in cash. This deal will bring together some of the largest candy and snack brands in the U.S. Mars will pay $83.50 per share for Kellanova, which separated from its parent company in 2023. Notably, this acquisition will add popular brands like Pringles and Cheez-Its to Mars’ snacking unit.
The decision to acquire Kellanova comes after Kellogg’s separation last year, with its cereal segment trading under WK Kellogg Co and the remaining snacking and plant-based brands under Kellanova. Kellanova saw net sales of over $13 billion in 2023. This move by Mars is strategic, as it aims to tap into the snacking market, especially with the recent trend of consumers pulling back on spending and opting for more affordable options.
Mars CEO Poul Weihrauch emphasized the company’s intention to grow its business for generations. He stated, “We buy businesses to grow businesses.” Mars believes that the acquisition of Kellanova will strengthen its ability to absorb the impacts of high inflation and provide quality snacks to consumers.
While this acquisition presents an opportunity for Mars to expand its snacking business globally, particularly in regions like China and Africa, it may also raise antitrust concerns. The overlap in the candy bars category could potentially limit competition in the market. Consumer advocacy group Food & Water Watch expressed concerns about Mars’ increased market share and the potential negative impact on consumers.
However, Kellanova CEO Steve Cahillane and Mars CEO Poul Weihrauch believe that the brands are complementary, and they are committed to working with regulators to address any antitrust concerns. Cahillane highlighted the fragmented nature of the bars market, stating that consumers have plenty of choices.
The snacking category has seen a rise in demand for healthier options. With the acquisition of Kellanova, Mars will add brands like RXBar and Nutri-Grain to its portfolio, complementing its existing offerings like Kind bars. This move aligns with the growing consumer preference for healthier snacking options.
The transaction is expected to close in the first half of 2025. It is worth noting that Toms Capital Investment Management, an activist fund, played a role in facilitating this acquisition. Toms Capital had been urging Kellanova management to pursue strategic and organizational changes.
In conclusion, Mars’ acquisition of Kellanova will create a stronger and more diverse snacking business, with a focus on global expansion and the inclusion of popular brands. While antitrust concerns may arise, both companies are committed to addressing these issues. This move reflects the evolving snacking market, which is seeing increased demand for healthier options.
