Mars eyes potential acquisition of US$22B Kellanova business unit

USA – Mars, one of the largest food companies in the world, is exploring its options for the acquisition of the owner of snacks brands such as Rice Krispies Treats and Pop-Tarts, Kellanova.

According to people familiar with the matter, the deal would be one of the biggest ever in the packaged food sector, given Kellanova’s market value of US$22 billion.

The sources, familiar with Reuters, said that there is no certainty that Kellanova will engage and pursue a deal with Mars, the sources said.

 Another suitor could also approach Kellanova, and it’s possible that no deal with any party is reached, the sources added, requesting anonymity because the matter is confidential.

Furthermore, shares of Kellanova are up about 20% since it was spun off from Kellogg Co last October but are still trading at a discount to some of its peers, such as Hershey and Mondelez International, making it a potential acquisition target.

Kellanova focuses on snacks, such as crackers, toaster pastries and cereal bars, as well as convenience foods such as ready-to-eat cereals, frozen waffles, veggie foods and noodles. It makes its products in 21 countries and markets them in more than 180 countries.

“We believe that K’s portfolio of popular snack brands will fit well with Mars’ and help them expand scale in international markets,” TD Cowen analyst Robert Moskow said in a client note.

“At times like this when growth slows, balance sheets are relatively clean, and valuations dip, the market leaders in food tend to look more closely at big combinations to drive cost synergies.”

Mars-owned Hotel Chocolat opens 25 new stores in UK

As the acquisition move unfolds, the newly acquired Hotel Chocolat has expanded its physical store presence across UK in retail parks and on high streets, with the launch of its 25 new stores.

Purchased last year for US$586 million, Hotel Chocolat will expand its presence in cities such as Belfast and Glasgow, and market towns including Ilkley, West Yorkshire, and Morpeth, Northumberland. The company will also expand existing locations in Nottingham and Chichester, West Sussex.

In addition to retail expansion, Hotel Chocolat will invest US10.99 million to enhance its manufacturing facility in Royston, Hertfordshire, creating 250 new jobs.

Since its acquisition by Mars, Co-founder and CEO Angus Thirlwell acknowledged some customer anxiety about potential changes to the brand.

He reassured customers, stating, “Our intention is to deepen our commitment behind all brand pillars, not to dilute them. Judge us by our actions, not by our words.”

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