According to insider sources, Mars, the giant corporation active in confectionery, food, and pet care spheres, is considering purchasing Kellanova – the maker of products like Pringles and Pop-Tarts. Kellanova, listed on the New York stock exchange with a market value of £20 billion (around $22 billion) as of Friday, originated from the 2023 split of Kellogg, which caused its breakfast cereals and snacks divisions to part ways. The firm’s shares rose roughly 15% to $72.11 on Monday morning.
Among Kellanova’s snack range are products like Pringles, Cheez-Its, and Rice Krispies Treats. Mars, a family-owned entity, is among the biggest privately-owned companies, marking annual revenues of over $50 billion and spearheading an employee force exceeding 150,000.
In the wake of consumers scaling back spending amid years of inflation nudging prices of countless staples above pre-pandemic figures, Mars is resorting to acquisitions to bolster growth. Notable buyouts in its portfolio include the 2017 procurement of VCA (a network of 800 pet care clinics) for $9.1 billion, the 2008 acquisition of chewing gum and snack producer Wm Wrigley Jr. for $23 billion, and the more recent purchase of UK’s luxury chocolatier Hotel Chocolat for £534 million in early 2021.
The Kellanova acquisition would rank among the largest happenings in the food industry in recent years. The financial aspects of the potential deal have yet to be established. Reuters was the first to report on the potential acquisition.
While Kellanova chose not to comment, Mars hasn’t provided any feedback on the matter yet. Despite the slowing trend in US consumer spending, Kellanova continues to showcase robustness. The company’s shares have seen a roughly 15% annual growth following the recent revision of its annual sales predictions following surpassing revenue expectations.
Packaged food industry expert, Robert Moskow of TD Cowen, remarks that a potential bid for Kellanova may signal the re-emergence of consolidation in the sector, reminiscent of the 1999-2001 period that witnessed General Mill’s acquisition of Pillsbury and Kraft’s nabbing of Nabisco. Moskow emphasizes that market leaders in the food industry are prone to eyeing substantial mergers, especially during phases of slowed growth, pristine balance sheets, and clipped evaluations.
Globally, there has been a resurgence in mergers and acquisitions, with the value reaching approximately $1.5 trillion in the first six months of 2024. This signifies an increase of around 20%, fueled largely by transactions exceeding $10 billion in value. This information is sourced from The Financial Times Limited 2024. As well as this, new episodes of our business-centric podcast, Inside Business, are released on a weekly basis – you can locate the most recent episode here.