Breaking news: Mars devours Kellanova in $29b mega deal amid bakery and snack M&A surge
Kellanova and Mars
Expected to be the biggest transaction of 2024 is the acquisition of Kellanova by candy giant Mars Inc, a deal that values the Pop-Tarts and RXBar maker at nearly $30bn. Mars is reportedly paying $83.50 per share for Kellanova, representing a substantial premium over the company’s recent stock price. The all-cash deal by the privately held company also takes on $6bn in net debt, according to people close to the deal. Mars boasts annual sales that exceed $50bn.
According to the Wall Street Journal, the Kellogg Co. spinoff has a market value of around $22bn, but shares skyrocketed once the news broke. At the time of writing, the share price of Kellanova is up 8%, at $80.54. On August 7, the company reported better-than-expected second-quarter results and raised its 2024 outlook.
The takeover comes less than a year after the split of Kellogg Co into two business entities.
WK Kellogg Co is Kellogg’s North American cereal business, which includes brands like Frosted Flakes, Froot Loops, Special K, Rice Krispies and Corn Flakes.
The second entity – Kellanova – stewards a suit of iconic brands – including Pringles, Cheez-It, Pop-Tarts, Nutri-Grain, RXBAR and others – along with plant-based labels like MorningStar Farms. The unit also oversees Kellogg’s international cereal brands such as Frosties, Zucaritas, Krave and Miel Pops; its noodle operations; and North American breakfast items like Eggo waffles.
The Kellogg’s name, however, remains on brand packaging for both companies in all territories around the world. The Mars takeover will create a powerhouse in the global snacks market, consolidating the candy maker’s iconic brands – including M&M’s and Snickers, among others – with Kellanova’s extensive portfolio. Analysts believe the deal is likely to pass regulatory muster as the two have very few overlapping products.
The deal is also one of the largest packaged-foods transaction since the merger between Kraft Foods Group and HJ Hein – now known as Kraft Heinz Co. This move is seen as part of a broader trend in the food sector, where companies are consolidating to achieve scale amid changing consumer preferences and economic pressures.
A notable trend is the continued consolidation within the bakery ingredients sector, which has seen intense M&A activity over the past decade. Companies like Orkla and Puratos have been particularly active, acquiring numerous businesses to expand their product portfolios and geographic reach. This consolidation is expected to lead to reduced costs for customers as synergies are realized, although it may also result in less choice over time.
WK Kellogg
Meanwhile, the North American cereal business of Kellogg Co is implementing an ambitious strategy to streamline its manufacturing network to offset flagging sales as consumers switch to private labels to cope with sticky inflation.
Under the plan, the Froot Loops maker will shut down its Omaha, Nebraska, plant by the end of 2026 and scale back production at its Memphis, Tennessee facility, in late 2025. It also intends to increase production at its Battle Creek, Michigan; Belleville, Ontario; and Lancaster, Pennsylvania plants, with planned spending of around $450m-$500m on its supply chain efforts.
The reorganization is expected to result in cumulative restructuring pretax charges of between $230m and $270m. The North American cereal business posted net sales of $672m for its second quarter. Shares fell more than 2% after the company projected 2024 adjusted net sales to come in at the lower end of its prior forecast range of 1% growth to 1% decline.
The Nebraska shutdown will reduce the Special K maker’s headcount by around 550 people; however, opportunities will open at the plants where production would increase.
WK Kellogg employed around 3,150 workers at the end of last year.
Corbion and Novotech
The sustainable ingredient specialist has acquired the Delhi-based bread improver business from Novotech Food Ingredients to further its ongoing strategy to expand geographically and in this instance, to fortify its presence in the Asia Pacific region.
“By enlarging our footprint, augmenting our portfolio with products tailored to local market needs and enhancing our collaboration with India-based global customers, we’re showing our commitment to sustained growth in India and broadening our reach into Asia,” said Andy Muller, president of Corbion’s Functional Ingredients and Solutions division.
“Leveraging local manufacturing strengths will help reinforce our position as a global solutions provider that is regionally relevant."
The authentic, locally developed offerings from the bread improver business is a natural fit with Corbion’s existing portfolio.
“We want our customers to make the most of the advantages that come with a leading global supplier,” added Muller.
“Our worldwide network offers them the flexibility and confidence of consistent sourcing. Yet, we also know that local expertise adds significant value. This acquisition strengthens Corbion's capacity to deliver both a global approach and regional insights, ultimately providing our customers with greater value.”
AB Mauri UK&I and Romix Foods
The global supplier of yeast and bakery ingredients has completed the acquisition of Romix Foods, a specialist food blending business based in Leigh, northwest England, which is specifically known for its allergen ingredients.
“This strategic acquisition enables AB Mauri to expand its footprint in this growing segment and provides additional flexibility to our wider UK manufacturing footprint,” said David Cooper, MD of AB Mauri UK&I.
“This ensures that we can continue to meet the demands of increasing variety and complexity from the markets we serve."
Romix MD Mick McGowan and the existing management team will continue to lead the company.
“We are committed to leveraging the strengths of our combined organisations to foster growth, innovation, and overall customer satisfaction,” said McGowan.
