On Wednesday, news broke that snacking giant Mars is set to acquire Kellanova (NYSE:K) for nearly $36 billion, representing a 33% premium over Kellanova’s closing price on August 2nd. The deal, expected to close in 2025, led to a more than 7% increase in Kellanova’s stock price following the announcement.
Mars, known for its dominance in the candy market with brands like Snickers, Twix, M&M’s, MilkyWay, Starburst, and Skittles, aims to broaden its snacking portfolio both domestically and globally through this acquisition. Kellanova, on the other hand, has a strong presence in the salty snack segment, with popular brands such as Pringles, Cheez-Its, Pop-Tarts, Rice Krispies Treats, NutriGrain, and RXBAR.
Since 2020, Mars has been steadily expanding its footprint in the snacking industry, acquiring brands like KIND’s North America business, Nature’s Bakery, and Trü Frü, a maker of chocolate-coated fruit snacks.
The second quarter of 2024 proved challenging for the food and snacking industry, as consumers faced increasing pressure from rising prices. Despite this, Kellanova stood out as the only publicly traded snacking company to achieve positive volume growth, according to Peter Galbo, a senior food and beverage analyst at BofA Securities.
However, data from Circana Group reveals that overall snack sales by volume are down 1% this year compared to the same period in 2023, while the broader food and beverage sector has seen an increase. Analysts at J.P. Morgan have noted that the decline in demand for salty snacks, which initially affected lower-income consumers, has now extended to middle-income consumers as well.
In addition to this major acquisition, the industry has seen other notable deals this year. Campbell Soup (NYSE: CPB) purchased Sovos Brands, the owner of Rao’s pasta sauce, and J.M. Smucker (NYSE: SJM) acquired Twinkie-maker Hostess Brands for $4.6 billion.
Mars plans to leverage the Kellanova acquisition to scale its operations and enhance distribution, particularly through smaller vendors like gas stations and convenience stores. The company also sees potential for innovation by pairing its salty and sweet snacks.
Kellanova’s stock is up nearly 34% year-to-date.
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