Mars to acquire Kellanova in $36 billion deal

Mars will acquire Kellanova for $35.9 billion in cash, tying together some of the largest U.S. candy and snack brands, the companies announced Wednesday.

The M&M owner Mars is acquiring the Kellogg spinoff company for $83.50 per share, according to the press release. The addition of Kellanova, which separated from its parent company in 2023, will bring massive brands like Pringles and Cheez-Its to Mars’ snacking unit.

“We buy businesses to grow businesses, and we look to grow for generations,” Mars CEO Poul Weihrauch said on CNBC’s “Money Movers.”

The move comes after Kellogg separated its business last year, with its cereal segment trading under WK Kellogg Co, and the remaining snacking and plant-based brands under Kellanova. Net sales in 2023 for Kellanova topped $13 billion.

After years of high inflation, some consumers are pulling back on spending and struggling to afford brand-name snacks, making acquisitions more attractive. Many grocers have leaned into private-label options to entice consumers who are looking for value.

“It’s our job as a business to try and absolve as much of these input costs as possible and put on as little as required to the consumers,” Weihrauch told CNBC. “We believe that coming together will make us stronger in absolving these shocks.”

Mars’ buyout aims to create a “broader, global snacking business” through recognized and popular brands, Andrew Clarke, global president of Mars Snacking, said in a statement.

Weihrauch said there is opportunity in places like China and Africa for the two companies to grow together. Mars has a larger business in China and Kellanova is stronger in Africa.

The acquisition could spark antitrust questions, particularly due to overlap in the candy bars category. Consumer advocacy group Food & Water Watch said in a statement that the deal would harm consumers, as Mars could take in nearly half of all snack and cereal bar sales after it closes. American grocery shoppers would face higher costs and fewer healthy options, the group’s research director Amanda Starbuck said.

Kellanova CEO Steve Cahillane said he doesn’t foresee any antitrust issues. Similarly, Weihrauch said the brands are complementary, and the company will collaborate with regulators.

“If you just take a stroll down the aisle in a supermarket of the bars, it is an incredibly fragmented space with lots of choice for consumers,” Cahillane said on “Money Movers.”

The growing snacking category includes brands marketed as healthier. Kellanova will bring products like RXBar and Nutri-Grain to the Mars business, complementing Kind and other Mars snacks, according to the release.

The transaction is expected to close in the first half of 2025, according to the release.

The acquisition comes after months of engagement with Toms Capital Investment Management, an activist fund run by Benjamin Pass which had amassed a sizeable stake in Kellanova, according to a person familiar with the matter. Toms Capital had been privately pushing Cahillane and Kellanova management to pursue strategic and organizational changes, the person said.

Toms previously mounted a campaign at Colgate in 2022, in collaboration with Dan Loeb’s Third Point.

— CNBC’s Rohan Goswami contributed to this report

Correction: Mars will acquire Kellanova for $35.9 billion in cash, the companies announced Wednesday. An earlier version misstated the day.