Mars, a family-owned packaged food giant with annual sales of more than $50 billion, is acquiring Kellanova (formerly Kellogg Co.) for nearly $36 billion in cash at a price of $83.50 per share, a premium of 12-44 percent to Kellanova’s closing price.

Kellanova owns popular snack and breakfast brands such as Cheez-It, Pop-Tarts, Pringles, NutriGrain, Eggo and Rice Krispies Treats, while Mars already produces M&Ms, Snickers, Life Savers and various chewing gum brands.

The acquisition will bring together two snack giants with net sales of over $50 billion each.

The aim of the acquisition is to expand Mars’ snack business, triple the size of its snack food business, increase its influence in the snack market and potentially double its snack business over the next decade.

The deal offers a 44% premium to Kellanova’s 30-day volume weighted average share price and is expected to close in the first half of 2025.

Kellanova will become part of Mars Snacking and will retain its headquarters in Chicago, while Battle Creek will remain a core location.

The deal is a response to consumer demand for branded snacks despite inflation and changing consumer behavior. Food prices in the U.S. have risen 25% between 2019 and 2023, shifting consumer preference to cheaper private labels and slowing the growth of packaged food companies.

Experts believe the Mars-Kellanova deal could withstand regulatory scrutiny despite antitrust concerns because Mars focuses on candy and sweets, while Kellanova specializes in salty snacks and global cereal distribution, and there is little product overlap.

The FTC’s challenge to Kroger’s acquisition of Albertsons on the grounds that it could result in price increases for consumers suggests a potential regulatory conflict.

If approved, the acquisition would be Mars’ largest since its purchase of Wrigley for $23 billion in 2008. It follows Mars’ previous purchase of KIND Snacks for $5 billion in 2020 and is consistent with its history of growth through acquisitions.

Under the deal, Mars could combine products such as Skittles-flavored Pop-Tarts or Snickers-flavored Pringles.

Sources: Washington Post, Bloomberg, Reuters, CNBC, The Guardian, Washington Times, Financial Times, USA Today, Forbes, ABC News, CNN, Le Monde, Vertigo Politico, New York Post, Vending Market Watch, MarketWatch.

This article was written in collaboration with Generative AI news company Alchemiq.