The maker of M&M's and Snickers Mars will acquire snack maker Kellanova. A multi-billion dollar deal will lead to the creation of a new giant in the industry.
The deal values Kellanova, which is behind snacks like Pringles and Pop-Tarts, at $35.9 billion, including debt.
"By adopting Kellanova's portfolio of growing global brands, we have a significant opportunity for Mars to continue to develop a sustainable business that is fit for the future," said Mars CEO Paul Weihrauch, AFP reported.
The move could draw the attention of US regulators, who have taken a hard line on consolidation.
CFRA Research analyst Arun Sundaram said he expected antitrust attention given the size of the deal amid the current rise in food prices.
"However, we believe the deal will ultimately go ahead given the limited category overlap between the two companies," he added.
Kellanova CEO Steve Cahillane told CNBC that the two companies are in contact with US regulators and do not expect any difficulties.
The acquisition, for $83.50 per share in cash, "accelerates the ambition to double the value of Mars Snacking over the next decade, in line with trends in global consumer demand," the company said.
This will bring two new billion-dollar brands, Pringles and Cheez-It, into its business.
The company now owns 15 billion-dollar brands.
Kellanova's 2023 net sales are approximately $13 billion and it is present in 180 markets with approximately 23,000 employees. Kellanova shares rose 7.7% in the United States.
Mars plans to fully finance the deal through a combination of available cash and new debt. The company currently employs about 150,000 people, and annual sales exceed $50 billion.
Apart from snacks and food products, the company is also involved in the pet care sector.
In 2022, Mars announced that it had reached a deal to buy the whole fruit snack brand Tru Fru. Two years earlier, it announced the acquisition of Kind North America, a company specializing in the production of healthier snacks. | BGNES
