Mars Reportedly Eyeing Major Acquisition
MCLEAN, Va. — Family-owned packaged food giant Mars Inc. is exploring a possible purchase of Kellanova K.N., the manufacturer of Cheez-Its, Pringles and other well-known snack brands.
If the acquisition went through, it would be one of the biggest ever in the packaged food sector, according to Reuters, given Kellanova's current market value of about $27 billion including debt. The deal would also almost certainly draw the interest of regulators concerned about the effects of such a large consolidation in the sector.
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Kellanova grew out of a Kellogg Co. split late last year. The board of directors of the more than a century-year-old company approved a separation into two independent, publicly traded companies, the aforementioned Kellanova and WK Kellogg Co.
Kellanova was designed to feature a growth-oriented portfolio weighted toward snacks and emerging markets, and led by highly differentiated brands that could be expanded upon. At the time of the spin-off, the board projected the new entity would generate net sales of approximately $13.4 billion to $13.6 billion. So far, the company's shares are up 20% since then, Reuters reported.
However, those shares are still underperforming compared to some of Kellanova's peers, such as The Hershey Co. and Mondelēz International, which might account for Mars finding it an attractive acquisition target. Should the transaction go through, it would be the biggest deal the company has participated in, dwarfing even the $9.1 billion acquisition of VCA Animal Hospitals in 2017.
As of now, the news outlet received no word that Kellanova would be interested in a deal with Mars, nor is it clear the latter company is the only interested party in picking up Kellanova’s brands. Both parties declined to comment.
Though some deals within the packaged food sector have been approved over the last few years, U.S. antitrust regulators have become more skeptical toward such mega-mergers recently, especially when, according to the U.S. Department of Agriculture, food prices have spiked by 25% between 2019 and 2023. Though there have been numerous contributors to the inflation, including fallout from the pandemic and supply chain woes, agencies have expressed concern over the continued elevation in many food product prices.