Mars has struck a $36bn mega-deal to take over Kellogg’s spin-out Kellanova and bring together global powerhouse brands such as Snickers, M&M’s, Pringles and Cheez-It.
The all-cash offer marks the biggest deal in Mars’s history, dwarfing the privately owned US group’s $23bn acquisition of chewing gum maker Wrigley in 2008.
Mars agreed to acquire Kellanova’s portfolio of global snacking, international cereal and North American plant-based foods brands for $83.50 a share, which is a 44% premium to the average recent share price and values the group at $35.9bn (£27.9bn). It represents a 16.4x multiple to Kellanova’s adjusted EBITDA.
Mars said the combination would bring together “world-class talent with leading brand-building experience to further develop a sustainable snacking business that is fit for the future”.
Kellanova is the result of a radical restructure at Kellogg’s first unveiled in 2022, which resulted in the Michigan-headquartered group separating into two independent publicly traded companies.
Revenues at Kellanova, which has a presence in 180 markets and employs about 23,000 staff, in 2023 totalled more than $13bn.
Mars CEO Poul Weihrauch said that in welcoming Kellanova’s portfolio of growing global brands there was “a substantial opportunity” for Mars to further develop a sustainable snacking business that was “fit for the future”.
Sustainable snacking business
“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,” he added. “We have tremendous respect for the storied legacy that Kellanova has built and look forward to welcoming the Kellanova team.”
Kellanova CEO Steve Cahillane said: “This is a truly 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 us to accelerate the realisation of our full potential and our vision. The transaction 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.
“We are excited for Kellanova’s next chapter as part of Mars, which will bring together both companies’ world-class talent and capabilities and our shared commitment to helping our communities thrive. With a proven track record of successfully and sustainably nurturing and growing acquired businesses, we are confident Mars is a natural home for the Kellanova brands and employees.”
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The deal is expected to close in the first half of 2025, subject to Kellanova shareholder approval and other customary closing conditions, including regulatory approvals.
Upon completion, Kellanova will become part of Mars Snacking, led by global president Andrew Clarke and headquartered in Chicago.
Mars said it intended 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.
Clarke added: “This is an exciting opportunity to create a broader, global snacking business, allowing Kellanova and Mars Snacking to both achieve their full potential.
“Kellanova and Mars share long histories of building globally recognized and beloved 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.”
The takeover would go a long way in helping Mars, which operates an empire spanning confectionery to petfood, meet its stated ambition to double its snacking revenues in the next decade.
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