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Mars’ $36 billion acquisition of Pringles maker Kelanova would transform the candy icon into a leading seller of chips, crackers and other snacks, giving it greater scale in the competitive snack market and giving it more leverage to compete with giants like Mondelez International and PepsiCo.
“They’re basically going to be one of the go-to (companies) for snacks,” said Dan McCarthy, an assistant professor of marketing at the University of Maryland. “This would be a pretty big step forward for the snack business, which has not historically been that dominant for (Mars).”
The acquisition, expected to close in the first half of 2025, will create a snacking company with a broad portfolio across the sweet, salty, health and wellness, breakfast, gum and mint categories.
Overnight, 113-year-old Mars will gain a deeper presence from our rapidly growing planet. savory To complement its exposure to confectionery and sweets, it deals with space, which is expanding at a slower rate than the food sector as a whole. Mars’ snack revenue also amounts to about $27 billion annually. Mizuho Securities USA, Helps your company get closer to its goals. In 10 years, the snack business doubled to $36 billion.
The new company will have more than $63 billion in sales and a portfolio of brands worth more than $17 billion, including Snickers, M&M's, Twix, Cheez-Its and Pringles.
“welcome Kelanova's With a growing portfolio of global brands, Mars has significant opportunities to further develop its sustainable snacking business into the future,” said Mars CEO Poul incense ” the company said in a statement announcing the deal.
Mars did not respond to an interview request for this article.
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Ian Waldie via Getty Images
The shift to the high-growth snack food market could signal difficulties in Mars' core confectionery business.
“The fact that they are diversifying also says something about the growth opportunities, or lack thereof, in the confectionery business,” McCarthy noted. “If there are still growth opportunities in confectionery, I would expect they will continue to reinvest.”
John Baumgartner, managing director of equity research for food and health and lifestyle products at Mizuho Securities America, said global market share for Mars has been flat or slightly declining over the past five years.
He estimated that Mars' market share in the global snack food market, which includes both sweet and savory products, would increase by 2 percentage points to 6% after the deal closes. Mars would rank third with 14% of the market, behind PepsiCo and Mondelēz with 8%.
“I do not expect this deal to materially change the competitive dynamics of the snack industry in the short term.” Baumgartner said. “But that makes Mars a more versatile competitor in the category.”
'no way A great combination between two premium food companies'
Erin Lash, director of consumer equity research at Morningstar, said the combination of Mars and Kelanova will give the combined company a greater presence across stores, which will provide valuable consumer insights that can drive sales and benefit retail partners.
This merger is also sweet – Kellanova CEO Steve Cahillan came up with the idea for M&M Pop-Tarts. They are sweet and salty. It’s a strategy Hershey has used in recent years to build its snack portfolio with Reese’s Drizzled Popcorn and Reese’s with pretzels and potato chips.
Lassie added that the deeper presence in snacking provides Mars with a brand that complements its current portfolio of indulgent chocolate products. With consumers eating healthier and increasing use of GLP-1 drugs for weight management, the newly combined company’s portfolio “could be advantageous as it seeks to appeal to consumers’ evolving tastes.”
Carl Quash III, head of snacks and nutrition at Euromonitor International, said in a statement that Mars would benefit from the repositioning of several of Kellanova's savory brands with a health-focused approach, such as the launch of Pringle's Harvest Blends. Cheese It Made with whole grains and real cheese.
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Mario Tama via Getty Images
“Mars may also be better able to cushion any challenges it faces in one part of its business, such as offsetting the chocolate pressure with a push into future savory products,” Quash III said.
Mars and Kellanova said the merger would provide them with opportunities to enter or expand into regions around the world. Mars currently has a strong presence in China, while Kellanova is a major player in Africa.
Baumgartner said Mars is No. 1 or No. 2 in confectionery in most parts of the world, and the company could leverage the infrastructure it has built to expand distribution of the Kellanova brand. He predicted Mars would adopt a similar playbook to the one it used for Kind after acquiring the remaining bar makers in 2020. Since then, Mars has launched Kind in about 30 new markets.
Arun Sundaram, equity analyst at CFRA Research, wrote in a note to investors:This is a great combination between two premium food companies, with Mars known for innovation and brand building, and K having the global reach to bring more Mars products to more markets.”
'NTheir first rodeo'
Mars, a privately held company expected to generate $50 billion in annual sales by 2023, has been actively pursuing M&A since its founding.
The company has pursued smaller bolt-on deals, such as the acquisitions of Kind and Kevin's Natural Foods, as well as business-changing acquisitions, such as the $23 billion purchase of gum maker Wrigley in 2008. Mars also strengthened its position in the pet market six years ago by buying veterinary and dog-care company VCA for about $8 billion.
McCarthy noted that snacks aren't “the sweet spot” for Mars, and that doubling down on the category carries inherent risks, but the company has proven adept at integrating and financially benefiting from previous deals. That's in contrast to the roughly 60 percent of acquisitions across the business that don't create shareholder value, he noted.
“Of all the potential buyers for a business like (Kelanova), Mars is one of the best,” McCarthy said. “This is not their first rodeo. They’ve made a number of acquisitions in the past… and they’ve implemented and executed very well overall.”
