Food Giant Mars Exploring Acquisition Of Kellanova, Sources Say

A deal would be one of the biggest ever in the packaged food sector, given Kellanova’s market value of about $27 billion (€24.84 billion) including debt, and test the appetite of regulators to allow consolidation in the sector.

Shares of Kellanova are up about 20% since it split from WK 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.

There is no certainty that Kellanova will 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.

Kellanova declined to comment, while spokespeople for Mars did not immediately respond to requests for comment.

‘Biggest Ever Deal’

A deal for Kellanova would be the biggest ever for Mars, dwarfing its $9.1 billion (€8.37 billion) takeover of veterinary hospital operator VCA in 2017.

The McLean, Virginia-based company has been seeking to diversify its business through acquisitions. It is owned by its founder Frank C. Mars’ descendants and generates about $47 billion (€43.24 billion) in annual sales. It operates under three divisions; Mars Petcare, Mars Snacking, and Mars Food & Nutrition.

Kellanova makes its products in 21 countries and markets them in more than 180 countries. Its separation from WK Kellogg last year left Kellanova with snacks, such as Pop-Tarts and Rice Krispies Treats, frozen breakfast foods, such as Morningstar Farms and Eggo, and an international cereal division.

ESM