Chocolate giant Mars announced that it was acquiring rival snack company Kellanova in a deal valued at nearly $30 billion — the largest ever acquisition in the packaged food industry.
The privately held maker of popular chocolate bars including Snickers, M&Ms and Milky Way said it has agreed to pay $83.50 a share — or a 33% premium to its closing price on Aug. 2 — for Kellanova in an all-cash deal, according to The Wall Street Journal.
Kellanova, whose portfolio of brands includes Cheez-It, Pringles and Eggo, closed at $74.50 a share on Tuesday. The stock was up by more than 7.5% in pre-market trading before Wednesday’s opening bell.
The deal comes as sales growth at US packaged food companies, including Kraft Heinz , Mondelez and Hershey slows due to budget-strapped customers opting cheaper, private labels instead of pricier branded items.
The deal surpasses Mars’ $23 billion takeover of Wrigley in 2008 and would bring under one roof popular consumer brands, including Mars’ Twix, Bounty and Milky Way chocolates as well as Kellanova’s snacks portfolio of Pop-Tarts, Rice Krispies Treats and Eggo frozen waffles.
Legal experts told Reuters that they believe the deal has a chance to withstand regulatory scrutiny stemming from concerns that the acquisition could violated antitrust laws.
In February, the Federal Trade Commission led by Chair Lina Khan challenged Kroger’s $24.6 billion acquisition of rival supermarket chain Albertsons.
The FTC charged the deal will eliminate “fierce competition between Kroger and Albertsons “leading to higher prices for groceries and other essential household items for millions of Americans.”
Kroger defended its deal, saying it has reduced prices every year since 2003 and would apply its business model to the merged company.
If US regulators do decide to challenge the Mars-Kellanova deal, they may struggle to convince antitrust judges that uniting Mars with Kellanova would raise prices or harm competition in the market, according to interviews with and notes from six antitrust lawyers and industry analysts.
This is because of the limited overlap between their offerings. Mars’ portfolio, which includes Twix, Bounty and Milky Way, centers on candy and sweets, such as chocolate.
The company is also the world’s largest pet food maker and a major operator of veterinary health centers.
Kellanova, which split from WK Kellogg last October, is rooted in a salty snacks business in the US and around the world, and selling cereal outside of North America.
WK Kellogg was left with the North American cereal business of Kellogg, the original parent company.
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