Two US Snack Industry Giants Announce $35.9 Billion Merger

In a big boost to the US snack industry, Mars Inc, a family-owned, global leader in pet care, snacking and food, and Kellanova, a leading firm in global snacking, international cereal and noodles, on Wednesday entered into an agreement under which Mars will acquire Kellanova for $83.50 per share in cash, for a total consideration of $35.9 billion, including assumed net leverage.

The transaction price represents a premium of approximately 44% to Kellanova’s unaffected 30-trading day volume weighted average price and a premium of approximately 33% to Kellanova’s unaffected 52-week high as of 2 August 2024.

Kellanova is home to iconic snacking brands including Pringles, Cheez-It, Pop-Tarts, Rice Krispies Treats, NutriGrain, and RXBAR, as well as cherished food brands including Kellogg’s (international), Eggo and MorningStar Farms.

With roots dating back more than 100 years, Kellanova has a rich legacy of quality and innovation and had 2023 Net Sales of more than $13 billion, with a presence in 180 markets.

Kellanova’s portfolio complements the existing Mars portfolio, which includes billion-dollar snacking and confectionery brands like SNICKERS, M&M’S, TWIX, DOVE, and EXTRA, as well as KIND and Nature’s Bakery.

Mars also has 10 pet care brands with over $1 billion in sales, including ROYAL CANIN, VCA, PEDIGREE, BANFIELD, WHISKAS, BLUEPEARL, CESAR, SHEBA, ANICURA and IAMS. With more than 150,000 Associates across its Petcare, Snacking and Food businesses, the net sales of Mars was more than $50 billion in 2023.

Great Opportunity

Mars President and CEO Poul Weihrauch said that they have a substantial opportunity for Mars to further develop a sustainable snacking business that is fit for the future.

“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,” he said.

Kellanova’s Chairman, President and CEO Steve Cahillane said that this was a historic combination with a compelling cultural and strategic fit. Kellanova has been on a transformation journey to become the world’s best snacking company, and this opportunity to join Mars enables them to accelerate the realisation of its full potential and vision.

“The transaction also maximises shareholder value through an all-cash transaction at an attractive purchase price and creates new and exciting opportunities for our employees, customers, and suppliers,” he added.

Upon completion of the transaction, Kellanova will become part of Mars Snacking, led by Global President Andrew Clarke and headquartered in Chicago, allowing Mars to bring even more beloved brands to more consumers globally.

Mars intends to apply its proven brand-building approach to further nurture and grow Kellanova’s brands, including accelerating innovation to meet evolving consumer tastes and preferences, investing locally to expand reach and introducing “more-better-for-you” nutrition options to meet evolving consumer needs.

Andrew Clarkesaid that Kellanova and Mars shared long histories of building globally recognised brands.

“The Kellanova brands significantly expand our Snacking platform, allowing us to even more effectively meet consumer needs and drive profitable business growth. Our complementary portfolios, routes-to-market and R&D capabilities will unleash enhanced consumer-centric innovation to shape the future of responsible snacking,” Clarke added.

Transaction Details

All of Kellanova’s brands, assets and operations, including its snacking brands, portfolio of international cereal and noodles, North American plant-based foods and frozen breakfast are included in the transaction.

Mars intends to fully finance the acquisition through a combination of cash-on-hand and new debt, for which commitments have been secured.

The agreement has been approved by the Board of Directors of Kellanova and the transaction is subject to Kellanova shareholder approval and other customary closing conditions, including regulatory approvals, and is expected to close within the first half of 2025.