Global confectionery giant Mars is reportedly considering the acquisition of snack company Kellanova, according to Reuters citing unnamed sources. While neither Mars nor Kellanova has confirmed the news, given Kellanova's market value of approximately $27 billion including debt, this potential deal could be one of the largest in recent packaged food industry. This acquisition could also challenge U.S. regulators' stance on major consolidation within the sector.

Background Information

In 2023, Kellogg Company was split into two independent publicly traded companies. WK Kellogg Co assumed the control of the North American cereal division, while the original company was rebranded as "Kellanova", owning snack brands such as Pop-Tarts and Pringles alongside the international cereal division. According to Kellanova’s financial results of H1 2024, its net sales decreased by 4.5% year-on-year (YoY) to $6.39 billion. However, on an organic basis—excluding the impact of currency and divestiture—its net sales increased by 4.7% YoY to $6.96 billion in H1 2024. In addition, the company reported an operating profit of $886 million, a 15.9% increase from the previous year, with currency-neutral adjusted operating profit reaching $1.04 billion, up 22.7% YoY.

Mars' interest in acquiring Kellanova aligns with its strategic goals of business expansion and diversification through means such as acquisition and integration. When choosing targets, Mars places significant value on their strategic and synergistic potential. Mars currently owns popular brands such as Dove, Snickers, M&M's, Skittles, Wrigley’s, and Extra, holding a dominant position in categories like chocolate, candy, and gum. Kellanova’s portfolio of snacks and cereals, produced in 21 countries and marketed in over 180, would complement Mars' offerings and expand its international presence. Additionally, industry insiders speculate that the rising consumer health concerns over sugary products and the recent surge in cocoa prices may impact Mars' core business, prompting the company to explore new avenues for growth.

It's also reported that Hershey, Mondelez, and PepsiCo have expressed interest in acquiring Kellanova after its shares surged 16% following the talks with Mars.