Mars to acquire Pringles maker Kellanova for nearly $36 bln

LOS ANGELES

M&M's and Snickers maker Mars said on Aug. 14 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.

"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," said Mars chief executive Poul Weihrauch in a statement.

The announcement comes as consumers feel the squeeze from rising costs of living, putting pressure on companies to rein in price hikes.

The move could also attract scrutiny from U.S. regulators who have taken a tough stance on consolidations.

CFRA Research analyst Arun Sundaram said he expects antitrust attention given the size of the deal against the current backdrop of rising food prices.

"However, we think the deal will ultimately go through, given the limited category overlap between the two companies," he added.

Kellanova CEO Steve Cahillane told CNBC both companies were in contact with U.S. regulators and expected no difficulties.

"We have a chocolate factory. A chocolate factory can't make Pringles," Weihrauch added in the same CNBC interview.

"We're not too concerned," he said.

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.

"Snacking is a large, attractive and durable category that continues to grow in importance with consumers," Mars added.

Kellanova had net sales in 2023 of around $13 billion, and it is present in 180 markets with some 23,000 employees.