Family-owned candy giant Mars is buying Cheez-It maker Kellanova in a nearly $36 billion deal, including debt, bringing together some of the biggest consumer brands from M&M’s and Snickers to Pringles and Pop-Tarts in one of the biggest deals in the industry.
Mars said on Wednesday it will pay $83.50 per share for Kellanova, representing about a 33% premium to its closing price on Aug. 2, before Reuters first reported that Mars was exploring a deal for the Pringles maker.
The U.S. packaged food sector is seeing robust dealmaking as companies seek scale to weather the impact of consumers shifting to cheaper private label brands due to rising prices.
Investors are also worried of a decline in sales from the greater adoption of weight-loss drugs such as Ozempic and Wegovy that could curb appetite and lead to feelings of fullness.
Mars said it plans bolster its snacking division, invest locally and introduce more healthier options through the deal, as the category is “attractive and durable”.
The company has a 4.54% share of the U.S. snacking market, while Kellanova holds about 3.9%, according to data from GlobalData, well behind market leader PepsiCo.
The acquisition, which dwarfs Mars’ $23 billion takeover of Wrigley in 2008, is also not expected to face too many antitrust roadblocks due to the limited overlap in the offerings of the two companies, legal experts had told Reuters.
After the completion of deal in the first half of 2025, Kellanova will become a part of Mars Snacking, led by Global President Andrew Clarke, the companies said. It will be based in Chicago.
Shares of Kellanova rose about 8% to $80.45 before the bell. On an equity basis, the company is valued at $28.58 billion, according to a Reuters calculation.
Kellanova, which split from WK Kellogg last October, is rooted in a salty snacks business and sells cereal outside of North America. WK Kellogg was left with the North American cereal business of Kellogg, the original parent company.
“It’s now clear why Kellanova went through the spin-off of its slow-growing domestic cereal business last year. We may see more packaged food companies divest or spin off slower-growing segments of their portfolios to attract new buyers,” CFRA Research’s Arun Sundaram said.
Reuters reported in May that investment firm TOMS Capital Investment Management had taken a “significant” stake in Kellanova and was in talks with the company to improve shareholder returns.
Under the terms of the deal, Mars will have to pay a termination fee of $1.25 billion in case of failure to obtain regulatory approvals, while Kellanova will have to pay $800 million to Mars in case of a change in board recommendation.
Mars intends to finance the deal through cash and new debt. Citi is its financial adviser, while Goldman Sachs is advising Kellanova.
