(Reuters) – Family-owned food giant Mars Inc, whose candy brands include M&M’s and Snickers, is considering acquiring Kellanova, the maker of snacks such as Cheez-It and Pringles, according to people familiar with the matter.
The deal would be one of the largest ever in the packaged food sector, given Kelanova’s market cap of $22 billion, and would test the appetite of U.S. regulators to allow consolidation in the sector.
Kellanova shares have risen about 20% since it was spun off from Kellogg (NYSE:) Co in October, but they still trade at a discount to some peers, such as Hershey and Mondelez International (NASDAQ:) , making them a potential takeover target.
There is no certainty that Kellanova will enter into negotiations with Mars and seek a deal, the sources said. Another suitor could also be approaching Kellanova, and it is possible that no deal will be reached with anyone, the sources said, asking not to be identified because the matter is confidential.
Kellanova declined to comment, while Mars spokespeople did not immediately respond to requests for comment.
Deals in the packaged food sector have been strong as companies seek to expand to counter the impact of inflation and drug demand. But many of the deals have been smaller than the mega-merger between Heinz and Kraft nearly a decade ago, as U.S. antitrust regulators have grown more concerned about the impact of big deals on consumers.
Kellanova focuses on snacks, such as crackers, toasted pastries and cereal bars, as well as prepared foods such as ready-to-eat cereals, frozen pies, vegetarian foods and pasta. Its products are manufactured in 21 countries and marketed in more than 180 countries.
Mars is a family-owned company whose consumer products include snacks and pet food. It also operates veterinary care centers and has a veterinary diagnostics company.
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