Executives behind the mega-merger stated that it will allow Twix bars to line shelves in Africa and Pringles to be sold in bulk in China. The deal requires approval from competition regulators.
Mars has made a noteworthy announcement, disclosing its acquisition of Kellanova, a well-known snack and cereal company. The deal is valued at an impressive $36bn (£28bn).
This merger will unite beloved brands such as Mars chocolate bars, Snickers, and M&M’s, along with pet food lines like Whiskas, with products like Pop-Tarts, Pringles, and a range of well-known cereals.
This is considered to be the biggest corporate acquisition announced this year.
The companies are confident that this strategic decision will help their brands expand into a wider global market.
In an interview with CNBC, Kellanova’s CEO, Steve Cahillane, highlighted that although Mars has a strong foothold in China, Kellanova’s operations in the country are comparatively modest… Take into account the potential of selling Pringles in China.
“When looking at our Africa business, it’s important to note that we have a substantial presence compared to their smaller operation.” What is the potential market for selling M&M’s and Twix bars in Africa, from a market analysis perspective?
According to him, the complementary nature strongly supported the industrial logic behind the deal.
Following Kellogg’s split into two companies—Kellanova and WK Kellogg Co.—in October of last year, this development has emerged.
WK Kellogg Co. was separated to solely concentrate on producing cereals for the North American market, while Kellanova assumed control of products in the rest of the world, including the UK. In addition, it maintains the production of various food brands within the United States.
Kellanova is well-known for its popular cereals that are specifically designed for the UK market. Some of these include Corn Flakes, Coco Pops and Rice Krispies.
The packaged food industry has been facing challenges in achieving growth due to stagnant prices caused by high inflation in various international markets.
Despite potential concerns, Mars CEO Poul Weihrauch expressed strong confidence in the success of the merger, emphasising its potential to drive further growth for the company.
He stated: “This is a narrative about the merger of two renowned American companies… It’s absolutely ideal.
The completion of the deal is anticipated to occur in the first half of 2025, pending approval from competition regulators.
Nevertheless, Mr. Cahillane expressed his confidence in obtaining permission.
Experts have also noted that the products offered by both companies have minimal overlap, suggesting that regulators, such as the UK’s Competition and Markets Authority, may have limited reasons to oppose the deal.
However, certain commentators have also raised concerns about the potential obstacles posed by the size of the firms involved.
According to Seth Bloom, a former lawyer for the US Senate’s antitrust subcommittee, there is a notable concern that these companies, due to their size and dominance in their respective markets, may face regulatory scrutiny.
According to the agreement, Mars has agreed to acquire Kellanova at a price of $83.50 per share, which represents a 33% premium over its closing price on August 2, prior to the news of the takeover.
After the transaction is complete, Andrew Clarke, the global president of Mars Snacking, will integrate Kellanova. As a result, Mr. Cahillane will be departing from the combined company.