Mars, the sweets, food and petcare conglomerate, is in talks to buy Pringles and Pop-Tarts maker Kellanova, according to people familiar with the matter, in what would be one of the year’s biggest takeovers.
New York-listed Kellanova, which had a market capitalisation of $22 billion (€20 billion) on Friday, was created in 2023 by the break-up of Kellogg’s that separated its breakfast cereals and snacks businesses. Its shares were trading up about 15 per cent at $72.11 on Monday morning.
Kellanova owns snacks including Pringles, Cheez-Its and Rice Krispies Treats. Family-owned Mars is one of the largest privately held companies, with annual sales of more than $50 billion and more than 150,000 employees.
The potential deal comes as consumers cut their spending after several years of inflation that have left prices for many staples above pre-pandemic levels.
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Mars has turned to acquisitions to help fuel growth, including the $9.1 billion purchase in 2017 of VCA, a group of 800 pet care hospitals. In 2008, it paid $23 billion deal for chewing gum and snacks maker Wm Wrigley Jr. Earlier this year, Mars acquired UK-based premium chocolatier Hotel Chocolat for £534 million.
The purchase of Kellanova would also mark one of the food sector’s biggest deals in several years. A price for the potential acquisition could not be immediately ascertained. News of the possible deal was first reported by Reuters.
Kellanova declined to comment. Mars did not immediately respond to requests for comment.
Kellanova has so far appeared to weather the slowdown in US consumer spending. Last week, the group raised its full-year sales forecasts after its latest earnings surpassed expectations. Its shares have climbed about 15 per cent this year.
Robert Moskow, an analyst at TD Cowen, said a bid for Kellanova “could usher in another cycle of consolidation in the packaged foods space”, echoing the period between 1999 and 2001, when General Mills bought Pillsbury and Kraft bought Nabisco.
“At times like this when growth slows, balance sheets are relatively clean and valuations dip, the market leaders in food tend to look more closely at big combinations to drive cost synergies,” Mr Moskow noted.
Mergers and acquisitions have begun to rebound globally, hitting $1.5 trillion in the first half of 2024. The overall value of deals jumped about a fifth, driven by an uptick in transactions worth more than $10 billion. – Copyright The Financial Times Limited 2024
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