Mars Inc., the maker of M&M’s, has announced their acquisition of Kellanova, the company behind popular brands such as Cheez-Its and Pop-Tarts, for nearly $30 billion. This deal will allow Mars to expand their snacking portfolio and enter new markets globally. Kellanova, formed last year after a split from Kellogg Co., had net sales of over $13 billion and employs around 23,000 people. Mars is set to pay $83.50 per share in cash for the acquisition, with a total value of $35.9 billion including debt.
The merger between Mars and Kellanova will give Mars more buying power from suppliers and negotiating leverage with retailers. The combined company will control around 8% of the U.S. snack market, positioning them just behind PepsiCo, the owner of Frito-Lay. Kellanova’s international presence will also help Mars expand their reach overseas. Furthermore, Mars intends to apply their organizational efficiency improvements to Kellanova’s operations, enhancing overall performance.
Kellanova’s CEO, Steve Cahillane, indicated that Mars initiated discussions about the acquisition a few months ago, following Kellanova’s strong revenue performance in recent quarters. The deal is expected to close in the first half of the next year, with Kellanova becoming part of Mars Snacking division. While some corporate functions may be consolidated, Cahillane anticipates that most Kellanova employees will integrate into Mars. The acquisition is seen as a strategic move to enhance Mars’ snacking platform and drive further business growth.
Analysts anticipate regulatory scrutiny of the deal due to the current market conditions, particularly high food prices. However, the minimal overlap in the product portfolios of Mars and Kellanova suggests that regulators may approve the acquisition. Mars’ expansion into the salty snacks category is a significant move for the company, which is primarily known for its chocolates, candies, and pet food. The acquisition aligns with a trend of food companies diversifying their offerings to cater to changing consumer preferences.
The acquisition of Kellanova by Mars presents opportunities for innovative product combinations, such as Skittles-flavored Pop-Tarts or Snickers-flavored Pringles. Limited-time offers and new product launches are strategies employed by food companies to attract consumers and secure shelf space. The timing of the acquisition is considered favorable, with easing inflation and pricing making branded snacks more appealing to consumers who are transitioning back to pre-pandemic spending habits.
Mars’ history of growth through acquisitions, starting from its inception in 1911, exemplifies their strategic approach to expanding their business. The company has made key acquisitions in the pet food and chewing gum sectors over the years. The purchase of Kellanova signifies a significant step towards diversification and market expansion for Mars. With Kellanova’s strong brand portfolio and international presence, Mars aims to enhance its position in the snacking industry and drive profitable growth.
