Mars has agreed to buy Kellanova in a deal that values the maker of Cheez-It and Pringles at almost $29 billion.
Kellanova said in a regulatory filing that its shareholders would receive $83.50 per share in cash, a 33% premium to the stock’s closing price on August 2, before Reuters first reported news of a possible takeover. Including debt, the deal is worth $35.9 billion.
The mega-deal will create a global snacks behemoth, adding a bevy of new nibbles to Mars’ portfolio of brands, which includes Snickers, M&M’s, and the Mars bar.
“The Kellanova brands significantly expand our snacking platform, allowing us to even more effectively meet consumer needs and drive profitable business growth,” Andrew Clarke, global president of Mars Snacking, said in a statement.
Shares in Kellanova (K) — created when Kellogg Company separated its snacks and cereal businesses last year — were up almost 8% in pre-market trading. The stock has surged some 28% so far this month, on better-than-expected earnings and after news of deal talks surfaced.
Kellanova, which also makes Pop-Tarts, Eggo, and MorningStar Farms vegan and vegetarian food, earlier this month raised its sales forecast after reporting strong first-half results.
The deal unveiled Wednesday, one of the biggest takeovers of the year, comes as consumers turn increasingly health-conscious, prompting food groups such as Nestle to develop products aimed at helping people manage their weight.
Consumers are also cutting back on non-essential spending — as inflation and high interest rates take a bite out of their budgets — hurting sales at companies including McDonald’s (MCD), Burger King, and Starbucks (SBUX).
Still, Mars and Kellanova see plenty of scope for growth in snacks. “Snacking is a large, attractive, and durable category that continues to grow in importance with consumers,” Kellanova said.
The Kellanova acquisition ranks in the top 10 global food and beverage mergers and acquisitions since 1995, according to Dealogic. It is the fourth-largest M&A deal so far this year and will add two billion-dollar brands — Pringles and Cheez-It — to the list of 15 already owned by Mars.
Family-owned Mars, which boasts annual sales in excess of $50 billion and a global workforce of 150,000, has been on a buying spree in recent years. In 2020, it snapped up the company behind Kind bars and later Nature’s Bakery. Two years later, it bought Trü Frü, which makes chocolate-covered fruit snacks. And last year, it spent more than half a billion dollars on boutique British chocolate maker Hotel Chocolat.
The Kellanova deal is expected to close in the first half of next year, subject to shareholder and regulatory approval.
This article has been updated with additional information. Anna Cooban contributed reporting.
