Mars to acquire Pringles maker Kellanova for $36bn

Mars is set to acquire Pringles maker Kellanova in a deal worth almost $36bn (£28bn). If approved, the deal would represent the biggest buyout in packaged goods industry history.

Mars currently owns snacking and confectionery brands including Snickers, M&M’s, and Twix, as well as petcare and food brands. The deal to acquire Kellanova would bring snacking brands like Cheez-It and Pringles into the Mars portfolio.

Kellanova was formed last year after a split in the Kellogg Company to form W.K. Kellogg, a North American cereal company, and Kellanova, the snacking and international cereal business. As such, if the acquisition were to be approved Mars would also own cereal brands like Kellogg’s Corn Flakes and Special K outside North America.

“Kellanova and Mars share long histories of building globally recognised and beloved brands,” says Mars Snacking global president Andrew Clarke, who will lead the new division headquartered in Chicago.

“The Kellanova brands significantly expand our snacking platform, allowing us to even more effectively meet consumer needs and drive profitable business growth.”

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Clarke calls the portfolios of the two businesses “complementary”, allowing Mars entry into new snacking sections. According to Kellanova CEO, Steve Cahillane, the acquisition represents a “truly historic combination with a compelling cultural and strategic fit”. Cahillane claims joining with Mars will help the business realise its full potential.

Given its scale, the proposed acquisition is likely to face anti-trust scrutiny in the US. However, it is thought regulatory scrutiny may be less given there is little overlap between the specific categories the two companies operate in.

The deal dwarfs Mars’s acquisition of chewing gum maker Wrigley in 2008, bought for around $23bn (£17.9bn) in 2008. Until news broke of the Kellanova buyout, the bringing together of Kraft and Heinz in 2015 represented the biggest merger in the consumer goods market, a deal worth around $100bn (£77.9bn).

$1bn brands

The deal to acquire Kellanova is in line with Mars’s ambition to double its snacking business in the next decade.

According to Mars, Kellanova’s brands are “spring-loaded platforms for future growth” and include two $1bn (£786m) brands: Pringles and Cheez-It. There are currently 15 $1bn brands across the existing Mars portfolio.

Mars also mentions in its announcement the acquisition will bring together “world-class talent with leading brand-building experience”, highlighting the potential to accelerate innovation to “meet evolving consumer tastes and preferences”.

“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,” says CEO of Mars Inc Poul Weihrauch.

“We have tremendous respect for the storied legacy that Kellanova has built and look forward to welcoming the Kellanova team.”

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The proposed deal comes at a challenging time for many consumer goods companies tasked with selling greater volumes to drive growth, something which is difficult in a cost-conscious consumer environment.

In its most recent results, for the half year ending 30 June 2024, Kellanova’s net sales fell 4.5% versus the same period in 2023. While adverse currency factors and its 2023 divestiture of Russian activities impacted these figures, volumes across the business were also down 3.6% versus 2023 levels.

As a privately-held company, Mars does not report its sales to investors regularly. However, it will no doubt be facing many of the same challenges currently being tackled by others in the FMCG industry.