Written by Anirban Sen and Savita Mishra
(Reuters) – Family-owned candy giant Mars Inc is buying Cheez-It maker Kellanova in a deal worth about $36 billion, combining consumer food brands from M&M’s and Snickers to Pringles and Pop-Tarts in one of the industry’s biggest deals.
Mars Inc. said on Wednesday it would pay $83.50 per share for Kelanova, representing a premium of about 33 percent to its closing price on Aug. 2 before Reuters first reported that Mars was exploring a deal to buy the Pringles maker.
The U.S. packaged food sector is seeing strong deals as companies seek to increase their volumes to counter the impact of consumers switching to cheaper private label brands due to rising prices.
Investors are also concerned about declining sales as a result of the growing reliance on weight-loss drugs such as Ozempic and Wegovy, which can suppress appetite and lead to feelings of fullness.
Mars said it plans to strengthen its snacks division, invest locally and offer more healthy options through the deal, as the category is “attractive and enduring.”
The company has a 4.54% share of the U.S. snack food market, while Kellanova has about 3.9%, according to data from GlobalData, far behind market leader PepsiCo (NASDAQ:PEPSICO).
The takeover, which dwarfs Mars’ $23 billion acquisition of Wrigley in 2008, is not expected to face many antitrust hurdles because of limited overlap in the two companies’ offerings, legal experts told Reuters.
Following the deal’s closing in the first half of 2025, Killanova will become part of Mars Snacks, led by global president Andrew Clarke, the companies said. The company will be headquartered in Chicago.
Kelanova shares rose about 7.4 percent to $80 in early trading. The company is valued at about $28.58 billion, according to Reuters calculations.
Kellanova, which was spun off from W.K. Kellogg Co. (NYSE:) last October, is a salty snack company that sells cereals outside North America. W.K. Kellogg left the North American cereal business to Kellogg, the original parent company.
“It is now clear why Kelanova decided to spin off its slow-growing domestic cereal business last year,” said Arun Sundaram of CFRA Research. “We may see more packaged food companies divest or spin off slower-growing segments of their portfolios to attract new buyers.”
Reuters reported in May that investment firm Toms Capital Investment Management had acquired a “significant” stake in Kelanova and was in talks with the company to improve shareholder returns.
Under the terms of the deal, Mars will have to pay a $1.25 billion termination fee if it fails to obtain regulatory approvals, while Kelanova will have to pay Mars $800 million if there is a change in the board’s recommendations.
Mars intends to finance the deal with cash and new debt. Citi is acting as financial advisor to the company, while Goldman Sachs is advising Kelanova.