Mars Acquires Kellanova for $36 Billion: A Snacking Industry Game-Changer
United States, Friday, 6 September 2024.
Mars Inc. is set to acquire Kellanova, maker of Pringles and Cheez-It, for $36 billion. This mega-deal aims to double Mars’ snacking revenue within a decade, potentially reshaping the global snacks market. The merger faces scrutiny from antitrust regulators amid concerns over market consolidation and consumer prices.
Strategic Shift for Mars
Mars’ acquisition of Kellanova marks a significant pivot for the candy giant, allowing it to diversify beyond its traditional confectionery roots. The integration of Kellanova’s salty snack offerings with Mars’ sweet portfolio is expected to better navigate market challenges and seize growth opportunities. This strategic move aims to reduce Mars’ dependency on cocoa and align more closely with shifting consumer demands[1].
Market Impact and Growth Projections
The $36 billion deal enhances Mars’ position in the snacking market, giving it a projected annual revenue of approximately $27 billion from snacking alone. The combined entity will boast over $63 billion in net sales and 17 brands, including Snickers and M&M’s, each generating over $1 billion annually[2]. Mars aims to double its snacking revenue to $36 billion within a decade, positioning itself as a formidable competitor against industry giants like PepsiCo and Mondelēz International[2].
Regulatory Scrutiny
The merger, announced on 14 August 2024, is not without challenges. Lina Khan, chair of the US Federal Trade Commission (FTC), has previously expressed concerns about competition in the candy industry. The FTC has 30 days to decide whether to pursue an in-depth review of the deal, focusing on its potential impact on consumer food prices and market competition[3]. Despite these concerns, Mars remains confident in obtaining regulatory approval, emphasizing the complementary nature of the two companies’ product portfolios[3].
Industry Reactions
Industry experts have mixed reactions to the deal. Dan McCarthy, an associate professor of marketing at the University of Maryland, noted that the acquisition represents a significant step for Mars in the snacking business, which historically hasn’t been as dominant for the company. He also mentioned that the deal is unlikely to materially change the competitive dynamics in the snacking industry in the short term[2]. On the other hand, Arun Sundaram, an equity analyst at CFRA Research, praised the merger as a good marriage between two high-caliber food companies, with Mars known for its innovation and brand building and Kellanova for its global reach[2].
Future Outlook
Looking ahead, the Mars-Kellanova merger is expected to stimulate increased merger and acquisition activity in the snack industry as competitors seek to strengthen their positions. The global snacks industry is projected to grow by over 8% in 2024, with significant growth expected in Latin America and the MENA region[4]. Mars’ enhanced portfolio will likely drive its ambition to become the second-leading player globally in savory snacks by 2025, trailing only PepsiCo[4].