Food giant Mars has announced a major acquisition in the snack and cereal industry, purchasing Kellanova for a whopping $36 billion (£28 billion). This mega-merger will bring together beloved brands such as Mars chocolate bars, Snickers, and M&M’s, as well as pet food ranges like Whiskas, with popular products like Pop-Tarts, Pringles, and a variety of well-known cereals. The deal, believed to be the largest corporate takeover announced this year, aims to expand the global reach of both companies’ products.
Kellanova’s CEO, Steve Cahillane, spoke with CNBC about the potential benefits of the merger, stating that Mars’ strong presence in China and Kellanova’s significant business in Africa will allow for increased sales of their respective products in these regions. He emphasized the complementary nature of the two companies and the strategic logic behind the deal.
This acquisition comes on the heels of Kellogg’s split into two separate companies, Kellanova and WK Kellogg Co, in October of last year. WK Kellogg Co focuses solely on producing cereals for the North American market, while Kellanova is responsible for products in the rest of the world, including the UK. Kellanova also continues to manufacture other food brands in the US. Some of Kellanova’s most well-known cereals in the UK include Corn Flakes, Coco Pops, and Rice Krispies.
The packaged food industry has faced challenges in recent years due to stagnant growth and high inflation in many international markets. However, Mars’ CEO Poul Weihrauch expressed confidence in the success of the merger and its potential to drive further growth for the company. He stated, “This is a story about two iconic American businesses coming together… It’s really a perfect fit.”
The deal is expected to be finalized in the first half of 2025, pending approval from competition regulators. Mr. Cahillane expressed confidence in obtaining approval, as the products sold by the two companies do not significantly overlap. However, some experts have raised concerns about the size of the companies involved and the potential for regulatory scrutiny. Seth Bloom, a former lawyer for the US Senate’s antitrust subcommittee, warned of the risk of heightened scrutiny due to the companies’ large market share in their respective segments.
Under the terms of the deal, Mars will pay $83.50 per share for Kellanova, a 33% premium on its closing price on August 2nd, before reports of the takeover surfaced. Kellanova will become a part of Mars Snacking, led by global president Andrew Clarke, with Mr. Cahillane stepping down from his role in the combined company.
