Makers of Snickers and Pringles to merge in $36 billion food deal

Mars, the company behind M&M’s and Snickers, has agreed to acquire Kellanova, the snack food business spun off by Kellogg’s last year, in a multibillion-dollar deal that will create a new global food giant.

The acquisition, one of the largest food deals in years, was announced Wednesday. The all-cash deal values Kellanova at $35.9 billion, including debt, a hefty premium to the company’s market value before news of the deal first began to leak.

Kellanova owns a large menu of brands including Cheez-It, Pringles and Eggo.

Mars, which is privately owned and best known for its chocolate candies, has tried to broaden beyond sweets. In 2020, it bought Kind North America, the company that makes Kind Bars. Mars has also invested heavily in its sizable pet business, which includes pet food brand Iams, as well as animal clinics and hospitals.

“In welcoming Kellanova’s portfolio of growing global brands, we have a substantial opportunity for Mars to further develop a sustainable snacking business that is fit for the future,” Poul Weihrauch, the CEO of Mars, said in a statement.

The deal comes at a tenuous time for food and beverage manufacturers. For more than two years, big food companies have steadily increased prices on products, partly to cover higher commodity and labor costs but also to expand their profit margins. Now, some consumers are pushing back, either buying less or trading down to generic brands.

Kellanova has increased its promotions in hopes of luring shoppers back.

In the quarter ending in late June, the company reported a 4% increase in organic net sales — excluding currency and the divestiture of its business in Russia — with volumes growing 2% in North America, which makes up roughly half of its business.

Kellanova was created by food giant Kellogg’s, which spun off its North American cereal business, now known as WK Kellogg Co., from its snack business, rebranded as Kellanova, last year.

Kellanova, which says it operates in 180 markets, generated more than $13 billion in revenue last year. It employs about 23,000 people. Mars, with more than 150,000 employees, recorded about $50 billion in sales last year.

The deal is expected to close in the first half of next year, the companies said. The acquisition could attract the attention of regulators, who have taken a tough approach to corporate consolidation under the Biden administration.

This article originally appeared in The New York Times.

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