Mars to Acquire Kellanova for $35.9 billion

In a deal that marks the largest in the food and beverage space since the $45 billion merger of Kraft Heinz in 2015, Mars, Incorporated and Kellanova have entered into a definitive agreement under which Mars has agreed to acquire Kellanova for $83.50 per share in cash, for a total consideration of $35.9 billion, including assumed net leverage. 

With roots dating back more than 100 years, Kellanova is home to iconic snacking brands such as Pringles, Cheez-It, Pop-Tarts, Rice Krispies Treats, NutriGrain, and RXBAR, as well as food brands that include Kellogg’s (international), Eggo, and MorningStar Farms. In 2023, Kellanova had net sales of more than $13 billion, with a presence in 180 markets and approximately 23,000 employees.

Kellanova’s brand assortment complements Mars’ existing portfolio, which includes billion-dollar snacking and confectionery brands like Snickers, M&M’s, Twix, Dove, and Extra, as well as Kind and Nature’s Bakery. Mars also has 10 pet care brands with over $1 billion in sales, including Royal Canin, VCA, Pedigree, Banfield, Whiskas, Bluepearl, Cesar, Sheba, Anicura, and Iams. With more than 150,000 associates across its Petcare, Snacking, and Food businesses, Mars had 2023 net sales of more than $50 billion.

“In welcoming Kellanova’s portfolio of growing global brands, we have a substantial opportunity for Mars to further develop a sustainable snacking business that is fit for the future,” says Mars, Inc. CEO and Office of the President Poul Weihrauch. “We will honor 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. We have tremendous respect for the storied legacy that Kellanova has built and look forward to welcoming the Kellanova team.”

Adds Steve Cahillane, chairman, president, and CEO of Kellanova, “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 realization of our full potential and our vision. The transaction maximizes 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.”

Says Mars, snacking is a large, attractive, and durable category that continues to grow in importance with consumers. Upon completion of the transaction, Kellanova will become part of Mars Snacking, led by Global President Andrew Clarke and headquartered in Chicago, allowing Mars to bring even more brands to more consumers globally. Mars says it intends 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 to meet evolving consumer needs.

“This is an exciting opportunity to create a broader, global snacking business, allowing Kellanova and Mars Snacking to both achieve their full potential,” says Clarke. “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.”

According to Mars, the transaction advances its strategic vision for the future of snacking in the following areas:

·     It accelerates its ambition to double Mars Snacking in the next decade, in alignment with global consumer demand trends. The addition of Kellanova provides Mars Snacking with entry into new snacking categories. It will add two new billion-dollar brands—Pringles and Cheez-It—to the Mars business, which today includes 15 billion-dollar brands. It will also expand the Mars health & wellness Snacking portfolio with the addition of new complementary products like RXBAR and NutriGrain to reflect global trends and preferences. With this transaction, Mars says it can extend its commitment to nourishing wellbeing through an expanded global reach and diversified product portfolio to meet evolving consumer tastes and demands.

·      It enhances Mars’ portfolio with addition of unique, category-leading and growing brands. Says Mars, Kellanova’s differentiated brand portfolio is defined by uniqueness, delivering category leadership and spring-loaded platforms for future growth. The majority of Kellanova snacking brands outperform category competitors, particularly among Gen Z and Millennial consumers.

·      It delivers a stronger, differentiated portfolio and distribution platform for priority international markets. Kellanova’s globally recognized portfolio includes brands with untapped potential. The combined portfolio will be well-suited to meet consumer demands for a variety of tastes and price points in fast-growing geographies, including Africa and Latin America, through complementary routes-to-market, supply chains and local operations.

·      It combines complementary capabilities to unlock growth and consumer-centric innovation. According to Mars, the addition of Kellanova’s R&D capabilities will enable the combined business to share best practices in brand building, deliver enhanced digital capabilities, unlock complementary channel strengths, and advance brand ecosystems and immersions.

It enhances positive societal impact of strong sustainability efforts. Kellanova has a long history of social and environmental leadership, including its Better Days Promise initiative, complementing the Mars Sustainable in a Generation Plan, which has delivered tangible progress, as reflected in its latest Sustainability Report, which documented strong decoupling of business growth from greenhouse gas emissions. Kellanova will also become part of the Mars Net Zero commitment and align with the Mars Responsible Marketing code. PW