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Mars, the confectionery, food and petcare giant, has reached an agreement to acquire Pringles and Pop-Tarts maker Kellanova at a more than $29bn valuation, marking one of the largest deals of the year, said people briefed about the matter.
The US conglomerate, known for sugary snacks such as M&M’s, Snickers and Skittles, plans to pay $83.50 per share for Kellanova, the people said.
An announcement unveiling Mars’s all-cash deal is expected on Wednesday morning in New York. Mars will also take on $6bn in net debt, added the people.
The offer made by the privately held company represents a significant premium to where Kellanova’s shares were trading just a few months ago.
The price Mars is offering to pay is unusual in the consumer sector, especially for a company making products that have fallen out of favour with health conscious customers.
Mars’s expected acquisition also comes as consumers have recently reduced their spending following several years of inflation, which has pushed prices for many staples above pre-pandemic levels.
However, Kellanova has so far managed to navigate the slowdown in US consumer spending and it recently raised its full-year sales forecasts after exceeding expectations with its latest earnings.
The New York-listed company, which also makes Cheez-It, Rice Krispies Treats and Eggo, was created in 2023 after Kellogg separated its breakfast cereals and snacks businesses.
Mars, which is one of the world’s largest family-owned businesses, boasts annual sales exceeding $50bn and a workforce of more than 150,000 employees.
The proposed deal is likely to face significant antitrust hurdles as competition watchdogs appointed by President Joe Biden’s administration have been aggressively challenging big mergers and acquisitions.
Dealmaking has slowed sharply over the past few years, although it has started picking up in recent months. If Mars’s acquisition of Kellanova is approved it is likely to usher a new wave of deals in the sector.
News about a deal being announced on Wednesday at $83.50 per share was first reported by The Wall Street Journal.
