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Shares of Kellanova, a snacking company, experienced a significant increase, closing up 16% on Monday. The surge in share value was driven by reports of buyout interest from Mars, the owner of M&M’s, and potentially from rival candy company Hershey as well. This news, reported by CNBC’s David Faber, has sparked speculation in the market.
It should be noted that Kellanova spokesperson Kris Bahner declined to comment on the matter, citing company policy. However, Reuters was the first to report the Mars interest. This development comes ten months after Kellogg spun off its cereal business, creating a new company named WK Kellogg in honor of its founder. The remaining business unit, now known as Kellanova, includes popular snack brands like Pringles and Cheez-It, as well as its North American frozen food unit, which includes Morningstar Farms.
With Monday’s stock move, Kellanova now boasts a market value of nearly $25 billion. This positive momentum led RBC Capital Markets analyst Nik Modi to upgrade Kellanova shares to outperform before the markets opened on Monday. Modi believes that the potential buyout deal could serve as a catalyst for further growth.
The timing of this potential acquisition is interesting as it comes at a time when food companies are facing challenges in organic sales growth. After several years of raising prices, consumers are now pulling back on their spending, which has slowed down sales growth for these companies. In light of this, acquisitions become more attractive for companies like Mars and Hershey.
For Mars, acquiring Kellanova would not only expand its portfolio, but it would also strengthen its snacking options. While Mars is known for its confectionery and pet businesses, its snacking portfolio is relatively limited, with only a few brands like Kind. Acquiring Kellanova would significantly enhance Mars’ snacking offerings and give them a stronger foothold in the market.
In conclusion, the potential buyout interest from Mars and Hershey has caused a surge in Kellanova’s stock value. This development comes at a time when food companies are looking for ways to overcome the challenges of slowing organic sales growth. Acquisitions provide an attractive opportunity for growth, allowing companies like Mars to expand their portfolios and strengthen their market positions. As the negotiations unfold, it will be interesting to see how this potential deal impacts the snacking industry and the future of Kellanova.
