Mars Takes Over Pringles: $36 Billion Mega Deal

Iconic brands, sweet and salty that have “comforted” at least two generations, M&M’S and Pringles will be closer together on the shelves from tomorrow. “Snacking is Better Together” is the slogan chosen by Mars and Kellanova (the Kellogg’s spinoff) to describe a 36 billion dollar operation that unites two companies with complementary categories, markets and portfolios. The operation is liked by Wall Street which immediately pushes the stock up 7.7% to 72.78 euros. “It is the largest operation in almost a decade and could stimulate other mergers and acquisitions in the sector” comments an analyst.

The historic company founded by Franklin Clarence Mars and his wife in 1911 has passed into the hands of the second generation Forrest E. Mars, Jr., John F. Mars and Jacqueline Badger Mars but since 2001 it has had a non-family management and is based in McLean, Virginia with a turnover in 2023 of over 50 billion dollars across three divisions, Petcare, Food & Nutrition and Snacking.
Snacks are a large category, with the best-known brands being M&M’S, the bars of the same name, but also Snickers and Orbit chewing gum, 15 brands in total known in over 180 countries. Kellanova (13 billion in revenue in 2023) will become part of this division, led by Andrew Clarke. The headquarters of Mars Snacking will remain in Chicago, but Battle Creek (Minnesota), where Kellogg was born, will remain an important location. Kellanova also has over a hundred years of history behind it and in 2022 it split from Kellogg’s (which remained with the cereals). In July, it announced, together with the results of the second quarter, an increase in its forecasts for the full year in which it expects organic growth in net revenue of 3.5%, an adjusted operating profit of between 1.8-1.9 billion dollars.

Kellanova shareholders will be offered $83.50 per share ($35.9 billion total including debt of approximately $5.6 billion, or 16.4 times adjusted EBITDA), a premium to the monthly average of approximately 44%. “This is a historic combination, with a great cultural and strategic fit,” added Steve Cahillane, president and CEO of Kellanova. “With Kellanova’s portfolio of brands, we have a substantial growth opportunity,” emphasized Mars CEO Poul Weihrauch. “Our complementary portfolios, go-to-market paths and R&D capabilities will enable greater consumer-centric innovation to shape the future of responsible snacking,” added Clarke.

Mars Snacking, which has previously stated its ambition to double in size over the next decade, already has 15 brands worth $1 billion, and will now add Pringles and Cheez-It to expand its portfolio of health and wellness snacks. The transaction, which Mars will finance through a combination of cash and new debt, for which commitments have been secured, was unanimously approved by Kellanova’s board of directors, will be submitted to shareholders and is expected to close in the first half of 2025. The WK Kellogg’s Foundation Trust and the Gund Family have entered into agreements under which they have committed to vote in favor of the transaction shares representing 20.7% of Kellanova’s common stock, as of August 9.