A box of Kellogg Co.'s Eggo brand frozen waffles is arranged for a photograph in New York.
Tiffany Hagler Bloomberg | Getty Images
Mars will acquire Kellanova for $35.9 billion in cash, uniting some of the largest candy and snack brands in the United States, the companies announced Wednesday.
M&M's owner Mars is acquiring Kellogg According to the press release, the company will spin off Kellanova for $83.50 per share. The addition of Kellanova, which was spun off from its parent company in 2023, will bring giant brands like Pringles and Cheez-Its to Mars’ snacks unit.
“We buy companies to grow them, 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 marketed under the name WK Kellogg Co, and the remaining snack and plant-based brands under the Kellanova name. Kellanova's 2023 net sales are expected to exceed $13 billion.
After years of high inflation, some consumers are cutting back on spending and finding it difficult to buy branded snacks, making purchases more attractive. Many supermarkets have turned to private label options to attract value-seeking consumers.
“Our task as a company is to try to absorb as much of these input costs as possible and offer consumers as little as possible,” Weihrauch told CNBC. “We believe that if we come together, we will be stronger in absorbing these impacts.”
The Mars acquisition is aimed at creating a “broader, more global snacking business” across well-known and popular brands, Andrew Clarke, global president of Mars Snacking, said in a statement.
Weihrauch said there are opportunities in places like China and Africa for the two companies to grow together. Mars has a bigger business in China and Kellanova is stronger in Africa.
The acquisition could raise antitrust questions, particularly because of the overlap in the candy bar category. Consumer advocacy group Food & Water Watch said in a statement that the deal would hurt consumers, as Mars could absorb nearly half of all snack and cereal bar sales after closing. American food shoppers would face higher costs and fewer healthy options, said the group’s research director, Amanda Starbuck.
Kellanova CEO Steve Cahillane said he doesn't anticipate any antitrust issues. Similarly, Weihrauch said the brands are complementary and the company will work with regulators.
“If you just walk down the bar aisles of a supermarket, you're looking at an incredibly fragmented space with so many choices for consumers,” Cahillane said on “Money Movers.”
The growing snack category includes brands that are marketed as healthier. Kellanova will add products such as RXBar and Nutri-Grain to the Mars business, which will complement Kind and other Mars snacks, according to the statement.
The transaction is expected to close in the first half of 2025, according to the statement.
The acquisition comes after months of collaboration with Toms Capital Investment Management, an activist fund run by Benjamin Pass that had amassed a sizable stake in Kellanova, according to a person familiar with the matter. Toms Capital had been privately lobbying Cahillane and Kellanova management to make 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 incorrectly stated the date.
