Mars reportedly considering Kellanova acquisition for snack giant mega-merger

05 Aug 2024 --- Mars is reportedly exploring the acquisition of Kellanova — commonly known as Kellogg’s — in what would be one of the largest mergers ever for the packaged food sector. Kellanova, whose brands include Pringles and Cheez-It, has a market value of around US$27 billion, including debt. 

Reuters broke the story yesterday (August 4) and attributed it to “people familiar with the matter.” One source told Reuters it is uncertain whether Kellanova would entertain a deal with Mars and added that other suitors could also make approaches.

Kellanova’s share price grew around 20% since its separation from WK Kellogg Co last October. But financial analysts highlight that the company is still trading at a discount compared to competitors like Mondelez International and Hershey, making it an attractive acquisition target.

A merger between two packaged snack giants like Mars, owner of big brands like Snickers and M&M’s, and Kellanova would test regulator appetite for consolidation in the sector.

M&A activity in the packaged food sector has been relatively lively in recent years amid the impacts of price inflation. Last year, J. M. Smucker acquired Hostess Brands for US5.6 billion, uniting two US snacking leaders.

Earlier this year, record-high cocoa prices pushed chocolate makers to increase consumer product prices and reduce product size, fueling the so-called “shrinkflation” trend.

Food Ingredients First will continue to monitor this developing story.

By Joshua Poole