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Mars, M&M's and Snickers maker said on Wednesday that it would acquire snack food business Kellanova, marking a multibillion dollar agreement set to result in a new industry giant.
The all-cash transaction would value Kellanova -- which is behind snacks such as Pringles and Pop-Tarts -- at $35.9 billion, including debt.
The announcement comes at a time when consumers feel the squeeze from rising costs of living, putting pressure on companies to rein in their price hikes. The move could, however, attract scrutiny from US regulators who have taken a tough stance on consolidations.
The acquisition for $83.50 per share in cash "accelerates ambition to double Mars Snacking in the next decade, in alignment with global consumer demand trends," Mars said.
This would bring two new billion-dollar brands, Pringles and Cheez-It, into its business.
Already, the company said it has 15 billion-dollar brands.
Kellanova had net sales in 2023 of around $13 billion, and it is present in 180 markets with some 23,000 employees.
Shares of Kellanova were up by 7.3 percent in US pre-market trading.
The Mars statement added that most of Kellanova's snack brands outperform competitors, especially among Gen Z and millennial buyers.
The combined portfolio would also be suited to meet demand in fast-growing markets such as Africa and Latin America, given their supply chains and local operations, the company said.
The plan, according to Mars, is to grow Kellanova's brands further.
The deal, which is anticipated to close in the first half of 2025, will need the green light from Kellanova shareholders and also require regulatory approvals.
Mars plans to fully finance the acquisition via a combination of cash-on-hand and new debt, it said, adding that commitments have been secured.
Family-owned business Mars said it employs about 150,000 workers and has over $50 billion in annual sales.
Besides snacking and food products, the company is also involved in the pet care sector.
Lewis Musonye
