Less than a year after it was spun off by Kellogg Co., Chicago-based Kellanova is set to be acquired by Mars, the companies announced Wednesday.
Mars will buy Kellanova in a deal worth nearly $36 billion. The transaction is expected to close during the first half of 2025.
The deal will bring Mars, the maker of Skittles and M&Ms, a portfolio of household-name snack brands including Cheez-It, Pop-Tarts, Pringles and Rice Krispies Treats. Kellanova’s portfolio also includes plant-based brand MorningStar Farms, which Kellogg had initially planned to spin off into a separate third company but kept amid declining sales.
While Mars Inc. is headquartered in Virginia, Mars Snacking is based in Chicago, and Mars Snacking Global President Andrew Clarke will lead the companies after the transaction closes.
Kellanova is also headquartered in Chicago, with offices at 412 N. Wells St. in River North. Kellanova CEO Steve Cahillane will exit the company after the deal closes, he confirmed in an interview with the Tribune. Cahillane said it was too early to say what, if any impact the merger might have on Kellanova’s local operations.
“For the city of Chicago, it’s an excellent thing that Mars Snacking is already located here,” he said.
In a statement, Mars Snacking President Clarke said the deal would create a “broader” snacking business.
“The Kellanova brands significantly expand our Snacking platform, allowing us to even more effectively meet consumer needs and drive profitable business growth,” Clarke said.
Cahillane noted the two companies also have complementary international footprints.
“They have an enormous business in China. We have a very, very small business in China,” he said. “Just imagine all the Pringles that can be sold through their system.”
The deal may have been prompted in part by waning growth in the packaged foods industry, said Erin Lash, director of consumer equity research for Morningstar. That decline in growth, which follows a boom in demand during the pandemic, has been accompanied by consumers who have pulled back because of higher prices and broader financial constraints, she said.
“Volumes have come under pressure or have started to stagnate,” Lash said.
Lash said the deal is not likely to be held up by antitrust concerns, noting a lack of significant category overlap between the two companies.
Cahillane said he did not anticipate antitrust issues to hinder approval of the deal, saying he was “highly confident” the merger will pass regulatory scrutiny. Cahillane pointed to the companies’ bars brands — Kellanova owns Nutri-Grain and RxBar, while Mars makes Kind Bars, for instance — as the only area in which they have significant overlap. The companies have contemplated the potential need to sell off parts of their bars business to satisfy regulators and would be prepared to do so, Cahillane said, but did not believe divestment will be necessary.
Will consumers see new salty-sweet snacks born of product combinations from the two companies’ portfolios? It’s possible, Lash said, noting that chocolate giant Hershey’s introduced Reese’s Popcorn after it acquired SkinnyPop.
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Cahillane declined to comment on any specific product combinations he’d like to see tested out. “I’ve been focused on the deal,” he said. “But that’ll be a fun thing to turn my attention to.”