Mars Eyes Massive Acquisition of Kellanova in Packaged Food Sector

Family-owned food giant Mars is considering a major acquisition of Kellanova, valued at $27 billion including debt. If successful, the deal would be one of the biggest in the packaged food industry. Regulatory scrutiny and other potential suitors could complicate the acquisition process.

Family-owned food giant Mars, known for its candy brands like M&M's and Snickers, is eyeing a significant acquisition of Kellanova, a maker of popular snacks such as Cheez-It and Pringles, according to sources familiar with the matter. The deal, if successful, could become one of the largest ever in the packaged food sector, given Kellanova's market value of roughly $27 billion, including debt. This potential merger will test the regulatory appetite for consolidation within the industry.

Shares of Kellanova have seen a rise of about 20% since its split from WK Kellogg Co last October, although they still trade at a discount compared to its peers like Hershey and Mondelez International. Despite the potential, there is no certainty that Kellanova will pursue a merger with Mars, and other suitors may come forward. Confidential sources emphasized there's a possibility no deal may be reached at all.

Kellanova and Mars declined to comment on the situation. The packaged food sector has seen a robust dealmaking activity as companies strive for scale to mitigate the effects of price inflation and changing consumer demand. Last year, J.M. Smucker acquired Hostess Brands for $5.6 billion, merging two major American snack makers. Smaller deals have been more common, given increased antitrust scrutiny from U.S. regulators concerned about higher prices and reduced choices for consumers.

(With inputs from agencies.)