Mars Eyes Acquisition of Kellanova in Blockbuster Packaged Food Deal

Mars, the family-owned food giant known for M&M's and Snickers, is considering acquiring Kellanova, the maker of Cheez-It and Pringles. Valued at $22 billion, Kellanova's shares have surged by 20% since its spin-off from Kellogg Co. There is no certainty of a deal, with regulatory concerns playing a significant role.

Family-owned food giant Mars, famous for its M&M's and Snickers brands, is exploring the potential acquisition of snack maker Kellanova, known for Cheez-It and Pringles. According to sources, this deal would rank among the largest in the packaged food industry, with Kellanova valued at $22 billion.

The acquisition would test U.S. regulators' willingness to allow further consolidation in the sector. Since its spin-off from Kellogg Co. last October, Kellanova's share prices have risen by about 20%, although they still trade at a discount compared to competitors like Hershey and Mondelez International, making it an appealing target.

There is no certainty that Kellanova will pursue the deal with Mars, and it remains open to other potential suitors. Sources, who requested anonymity due to the confidential nature of the discussions, indicated that a deal may not ultimately be reached with any party. Mars and Kellanova did not immediately respond to requests for comment.

The packaged food sector has seen a surge in dealmaking as companies seek to scale up to cope with price inflation and declining drug-loss demand. While recent deals have been smaller compared to the Heinz-Kraft merger, antitrust regulators are increasingly cautious about large-scale mergers' impact on consumers.

Kellanova produces a variety of snacks and convenience foods, marketed in more than 180 countries, while Mars also has a significant presence in snacks, pet food, and veterinary care services.

(With inputs from agencies.)