Mars Acquires Kellanova, Shaping Food Manufacturing's Future

Mars, the global manufacturer of iconic snacks, sweets and mints, has announced its agreement to acquire Kellanova for US$35.9bn. 

Kellanova, formerly Kellogs, manufactures a diversity of cereals and snacking products and has been bought in an all-cash transaction which values the company at US$83.50 per share.

This monumental move brings together Mars’ extensive portfolio of confectionery and pet care brands with Kellanova’s snacking and food brands. This strategic acquisition will significantly bolster Mars' position as a dominant food manufacturer, adding renowned names such as Pringles, Cheez-It, and Pop-Tarts to its existing lineup that includes Snickers, M&M’s and Twix.

“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,” comments Poul Weihrauch, CEO and Office of the President of Mars, Incorporated. “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.”

Growth in manufacturing & the popularity of snacks  

The acquisition comes at a time when the snacking category continues to grow in demand for consumers, influencing the food manufacturing landscape.

By integrating Kellanova into its operations, Mars aims to accelerate its ambition of doubling its snacking business within the next decade.

The combined entity will benefit from enhanced research and development capabilities, expanded distribution networks, and a more diversified product portfolio catering to evolving consumer preferences.

Steve Cahillane, Chairman, President and CEO of Kellanova, highlighted the strategic fit and cultural alignment between the two companies: “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 accelerise the realisation of our full potential and our vision.”

The transaction is expected to create significant value for shareholders, with Kellanova's stock price receiving a substantial boost.

Moreover, the deal promises to open up new avenues for growth and innovation within the snacking industry. Mars intends to leverage its proven brand-building approach to further nurture and expand Kellanova's brands, with a focus on accelerating innovation, investing in local markets and introducing more better-for-you nutrition options.

Andrew Clarke, Global President of Mars Snacking, emphasised the complementary nature of the two companies' portfolios: “This is an exciting opportunity to create a broader, global snacking business, allowing Kellanova and Mars Snacking to both achieve their full potential. Our complementary portfolios, routes-to-market and R&D capabilities will unleash enhanced consumer-centric innovation to shape the future of responsible snacking.”

The merger is expected to have far-reaching implications for food manufacturers, particularly in international markets.

The combined portfolio will be well-positioned to meet diverse consumer demands across various price points and taste preferences, especially in fast-growing regions such as Africa and Latin America.

This global reach, coupled with the companies’ complementary routes-to-market and supply chains, is likely to give the merged entity a significant competitive advantage.

Sustainability and social responsibility also feature prominently in the rationale behind the acquisition.

Both Mars and Kellanova have established track records in environmental and social leadership. The merger is expected to enhance these efforts, with Kellanova set to become part of Mars' Net Zero commitment and align with its Responsible Marketing code.

The transaction, which is subject to Kellanova shareholder approval and regulatory clearances, is anticipated to close within the first half of 2025. Mars plans to finance the acquisition through a combination of cash-on-hand and new debt, for which commitments have already been secured.

Reflecting on the transformative nature of the deal, Steve Cahillane concludes: “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.”

****** 

Make sure you check out the latest edition of Manufacturing Digital and also sign up to our global conference series - Procurement & Supply Chain 2024 & Sustainability LIVE 2024
******
Manufacturing Digital is a BizClik brand.