Mars to Acquire Kellanova for $36B in All-Cash Deal
Mars, Inc. will acquire Kellanova for $35.9 billion, including $6 billion in debt, in an all-cash transaction, representing one of the biggest deals in the industry and largest of the year. The privately-owned candy giant will pay $83.50 per share for the snack maker, a premium of approximately 33% to Kellanova’s 52-week high as of August 2, 2024. The total consideration represents an acquisition multiple of 16.4x LTM adjusted EBITDA.
All Kellanova’s brands, assets and operations, including its snacking brands, portfolio of international cereal and noodles, North American plant-based foods and frozen breakfast are included in the transaction.
Kellanova snacks include household names such as Pringles, Cheez-It, and Pop-Tarts, among others, and complements the existing Mars portfolio, which includes Snickers, M&Ms and Twix. Kellanova had net sales of more than $13 billion in 2023, while Mars had net sales of more than $50 billion.
“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 realization of our full potential and our vision,” said Steve Cahillane, chairman, president and CEO of Kellanova.
The deal comes as sales growth at US packaged food businesses such as Kraft Heinz, Mondelez, and Hershey slows due to budget-conscious customers choosing cheaper private labels over more expensive branded foods. Kraft Heinz is the only packaged food sector with a greater market capitalization than Mars’ premium for Kellanova, which could indicate that valuations are low.
Upon completion of the transaction, which is expected to close the first half of 2025, Kellanova will become part of Mars Snacking, led by Snacking Global President Andrew Clarke.
Citi is serving as financial adviser to Mars. J.P. Morgan and Citi have provided Mars with financing support for the transaction. Skadden, Arps, Slate, Meagher & Flom LLP is serving as legal advisor to Mars on the acquisition, with Simpson Thacher & Bartlett LLP providing legal advice for debt financing. Cravath, Swaine & Moore LLP is serving as financing counsel to J.P. Morgan and Citi.
Goldman Sachs is serving as financial advisor to Kellanova. Lazard is serving as financial advisor to Kellanova’s board of directors. Kirkland & Ellis LLP is serving as legal advisor to Kellanova.