After a week of negotiations, chocolate and puppy food giant Mars will pay a whopping $36 billion (including debt) to buy Kellanova, the maker of snacks like Pringles and Pop-Tarts.
Family-owned Mars will pay more than $83. 50 per percentage in hard and hard money for Kellanova, making it the largest acquisition in the food industry. As a personal company, Mars can’t offer consistent percentages, so you’ll have to dig deep into your wallet or rack up debt to cover that maximum price. When rumors about the deal surfaced two weeks ago, Kellanova’s price surged from around $20 billion to more than $24 billion. The final price of money, debt, is a staggering $29 billion, a 30% increase in less than a fortnight.
This mega deal comes as other primary food corporations such as Kraft Heinz, Mondelez and Hershey struggle with slowing sales. As shoppers tighten their belts, they turn to less expensive generic opportunities to spend on expensive brand-name products. Even foreign giants such as Nestlé and Unilever, as well as fast food chains such as Starbucks and McDonald’s, are feeling the pressure.
The deal with Kellanova would be the largest ever made through Mars, eclipsing its $23 billion acquisition of Wrigley in 2008. This union would create a snack powerhouse, combining Mars’ chocolate empire (think Twix, Bounty, and Milky Way) with Kellanova’s snacks like Pop-Tartlets, Rice Krispies treats, and Eggo waffles.
Kellanova, once part of cereal maker Kellogg, split last year to focus on snacks. Kellogg maintained older cereal brands such as Corn Flakes and Fruit Loops.
This is the first time that a big deal in the food industry has backfired. In 2013, Warren Buffett’s Berkshire Hathaway and Brazilian investment organization 3G teamed up to buy Kraft Heinz for $23. 3 billion. However, the investment turned sour, and Kraft Heinz wrote down its assets by a whopping $15 billion in 2019. Buffett admitted to overpaying, but Mars is unlikely to make the same mistake. As one of the world’s largest personal businesses, with a history spanning more than a century, Mars has a proven track record.
Mars already dominates the supermarket with brands like Whiskas, Pal, M
Although Mars will have a formidable presence, the festival remains strong in the world of snacks. Companies like PepsiCo (with Frito Lay and Smiths), Mondelez (Cadbury and Milka), Nestlé, Lindt, Ferrero and Hershey will continue to fight for market share.
Overall, the Mars-Kellanova agreement is a turning point for the food industry, with far-reaching implications for consumers, retailers and competitors.
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Increases across the board of Deep Leads’ resources: quality, tonnage and target area ABx Group has reported a 30% increase in its mineral resource estimate (MRE) at Deep Leads’ rare ion adsorption clay (IAC) earth deposit in northern Tasmania. The accumulation in MRE comes from 36 tested outlets, representing a significant northward extension for the existing Deep Leads prospect.
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