Mars has rubber stamped the takeover of US snacks maker Kellanova in a deal valued just shy of $36bn, subject to regulatory approvals.
Snacks and confectionery giant Mars confirmed the transaction today (14 August), ending more than a week of speculation that an imminent takeover might be in the pipeline.
Privately-owned Mars has struck for $83.50 a share for a total consideration for the Pringles and Cheez-It brand owner of $35.9bn, more than the speculated price tag of around $30bn.
The Kellanova deal surpasses the $23bn Mars paid for the Wrigley’s chewing gum business in 2008, which was supported by Warren Buffet’s Berkshire Hathaway, before the billionaire investor was bought out in 2016.
Kellanova’s shares were up almost 8% in pre-market trading in New York at $80.35 as of 12:20pm BST in the UK. They closed at $74.50 yesterday and have climbed 32% in the past month.
Poul Weihrauch, the president and CEO of Mars, said: “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.
“We will honour 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.”
Mars, the owner of brands such as Snickers and Kevin’s Natural Foods, said it will finance the transaction through a combination of cash on-hand and new debt, commitments for which have been made.
Kellanova’s shareholders still need to approve the deal, which is expected to close in the first half of 2025 once regulatory approvals are secured.
The transaction represents an “acquisition multiple of 16.4x LTM adjusted EBITDA as of June 29, 2024”, Mars said in a statement, adding the share price deal of $83.50 is a premium of approximately 44% to Kellanova’s “unaffected 30-trading day volume weighted average price and a premium of approximately 33% to Kellanova’s unaffected 52-week high as of August 2, 2024”.
Steve Cahillane, the chairman, president and CEO of Kellanova, said: “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 realisation of our full potential and our vision.
“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.”
Speculation surfaced recently that Kellanova might be a target for a buyout following last year’s split from Kellogg to centre on snacks, frozen foods, noodles and breakfast cereals outside of North America.
While Mars does not generally reveal its financial figures as a privately-owned business, the Skittles and Nature’s Bakery brand owner confirmed today that it generated more than $50bn in sales in 2023.
Mars also has ten pet-care brands in its portfolio, including food, providing circa $1bn in annual sales, the company said.
Meanwhile, Kellanova reported $13.1bn in fiscal 2023 revenue, bearing in mind the intricacies of the spin-off from Kellogg.
Kellanova will become part of Mars Snacking, led by global president Andrew Clarke and headquartered in Chicago. The manufacturing plant in Battle Creek, Michigan, will also be retained by the Kind snacks and M&Ms maker.
Plant-based foods, or Kellanova's MorningStar Farms brand, will also come under the Mars' umbrella, a business that was up for disposal as part of last year's split before a decision was made to retain it.
Clarke added: “This is an exciting opportunity to create a broader, global snacking business, allowing Kellanova and Mars Snacking to both achieve their full potential.”
