The transaction was agreed at $83.50 per share, subject to regulatory approval.
Mars has finalised the acquisition of US snacks maker Kellanova in a deal valued at just under $36bn, pending regulatory approvals.
Snacks and confectionery giant Mars confirmed the transaction today (14 August), putting an end to more than a week of speculation that a takeover was imminent.
Privately-owned Mars has agreed to pay $83.50 per share, resulting in a total consideration of $35.9bn for the Pringles and Cheez-It brand owner, exceeding the speculated price tag of around $30bn.
The Kellanova deal surpasses the $23bn Mars paid for the Wrigley’s chewing gum business in 2008, a deal that was supported by Warren Buffett’s Berkshire Hathaway, before the billionaire investor was bought out in 2016.
Kellanova’s shares rose nearly 8% in pre-market trading in New York, reaching $80.35 as of 12:20 pm BST in the UK. They closed at $74.50 yesterday and have surged 32% over the past month.
Poul Weihrauch, the president and CEO of Mars, said: “In welcoming Kellanova’s portfolio of growing global brands, we have a substantial opportunity for Mars to further develop a sustainable snacking business that is fit for the future.
“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.”
Mars, the owner of brands such as Snickers and Kevin’s Natural Foods, stated that it will finance the transaction through a combination of cash on hand and new debt, for which commitments have already been secured.
Kellanova’s shareholders still need to approve the deal, which is expected to close in the first half of 2025, once regulatory approvals are obtained.
The transaction represents an “acquisition multiple of 16.4x LTM adjusted EBITDA as of 29 June 2024,” Mars said in a statement, adding that the share price of $83.50 represents a premium of approximately 44% over Kellanova’s “unaffected 30-trading day volume weighted average price and a premium of approximately 33% over Kellanova’s unaffected 52-week high as of 2 August 2024.”
Steve Cahillane, the chairman, president and CEO of Kellanova, said: “This is a truly historic combination with a compelling cultural and strategic fit.
“Kellanova has been on a transformation journey to become the world’s best snacking company, and this opportunity to join Mars enables us to accelerate the realisation of our full potential and our vision.
“With a proven track record of successfully and sustainably nurturing and growing acquired businesses, we are confident Mars is a natural home for the Kellanova brands and employees.”
Speculation had recently arisen that Kellanova might be a target for a buyout following last year’s split from Kellogg to focus on snacks, frozen foods, noodles, and breakfast cereals outside of North America.
While Mars does not typically disclose its financial figures as a privately-owned business, the Skittles and Nature’s Bakery brand owner confirmed today that it generated more than $50bn in sales in 2023.
Mars also has ten pet-care brands in its portfolio, including food, which together provide around $1bn in annual sales, according to the company.
Meanwhile, Kellanova reported $13.1bn in revenue for fiscal 2023, taking into account the complexities of the spin-off from Kellogg.
Kellanova will become part of Mars Snacking, led by global president Andrew Clarke and headquartered in Chicago. The manufacturing plant in Battle Creek, Michigan, will also be retained by the Kind snacks and M&Ms maker.
Plant-based foods, including Kellanova’s MorningStar Farms brand, will also come under Mars’ umbrella, a business that was initially up for disposal as part of last year’s split before a decision was made to retain it.
Clarke added: “This is an exciting opportunity to create a broader, global snacking business, allowing Kellanova and Mars Snacking to both achieve their full potential.”