Mars’ purchase of Pringles maker Kellanova for $36 billion will transform the candy icon into a leading seller of chips, crackers and other treats — giving it greater scale in the competitive snacking space and providing more heft to go up against juggernauts such as Mondelēz International and PepsiCo.
“They’ll basically be one of the go-to [companies],” in snacking, said Dan McCarthy, associate professor of marketing at the University of Maryland. “This will be a pretty big step in the direction of the snacking business, which historically hasn’t been quite as dominant for [Mars].”
The purchase, which is expected to close in the first half of 2025, creates a snacking company with a vast portfolio spanning the sweet, salty, health and wellness, breakfast; and gum and mints categories.
Overnight, the 113-year-old Mars will have a deeper presence in the fast-growing savory treats space to complement its exposure in sweets and confectionery, which are expanding at a slower clip across the food sector. It also brings Mars’ snacking revenue to about $27 billion annually, according to Mizuho Securities USA. This puts the company closer to reaching its goal of doubling its exposure in the category to $36 billion in a decade.
The new firm will have more than $63 billion in net sales and 17 billion-dollar-plus brands, including Snickers, M&M’s, Twix, Cheez-It and Pringles.
“In welcoming Kellanova’s portfolio of growing global brands, we have a substantial opportunity for Mars to further develop a sustainable snacking business that is fit for the future,” Mars CEO Poul Weihrauch said in a statement announcing the deal.
Mars did not respond to a request for comment for this story.
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The move into higher-growth snacking could indicate challenges within Mars’ core confectionery business.
“The fact that they are diversifying also says something about the growth opportunities, or lack of growth opportunities in the confectionery business,” McCarthy noted. “If there were still growth opportunities in confectionery, one would expect them to continue to reinvest in it.”
John Baumgartner, managing director for equity research in food and healthy living for Mizuho Securities USA, said Mars’ market share around the world during the past five years has been flat to slightly down.
He estimated Mars’ market share in snacking globally, which includes both sweet and salty offerings, would increase 2 percentage points to 6% after the transaction closes. Mars would rank third, behind PepsiCo, with a market share of 14%, and Mondelēz, at 8%.
“I wouldn’t expect this deal to materially change the competitive dynamics in the snacking industry in the short term,” Baumgartner said. “But it makes Mars a more well-rounded competitor in the category.”
‘A good marriage between two high-caliber food companies’
Erin Lash, a director of consumer equity research at Morningstar, said a Mars-Kellanova merger would give the combined entity a bigger presence throughout the store, providing a trove of valuable consumer insight it could use to grow sales and benefit its retail partners.
The merger also opens up more opportunities for innovation in both sweet — Kellanova CEO Steve Cahillane floated the idea of M&M’s Pop-Tarts — and sweet and salty. It’s a strategy that Hershey has employed in recent years as it has built up its snacking portfolio with the launch of Reese’s Drizzled Popcorn and Reese’s stuffed with pretzels and potato chips.
Lash added that a deeper presence in snacking provides Mars with brands to complement a portfolio that currently leans indulgent with its prominent chocolate offerings. As consumers look to eat healthier, and the use of GLP-1 medications for weight management increases, the portfolio of the newly merged company “could be advantageous as they look to appeal to an evolving pallet for consumers.”
Carl Quash III, the head of snacks and nutrition at Euromonitor International, said in a statement that Mars will benefit from the repositioning of several of Kellanova’s savory brands to have a healthier focus, such as the launch of Pringle’s Harvest Blends and Cheez-Its made with whole grains and real cheese.
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“Mars will also be able to better buffer the challenges faced in any one part of its business — like offsetting chocolate pressures with a push in its future savory offerings,” Quash III said.
Mars and Kellanova said the merger would provide an opportunity to enter or expand into geographies around the world. Mars currently has a strong business in China while Kellanova is a major player in Africa.
Baumgartner said Mars is first or second in confectionery in most parts of the world, and the company will be able to tap into the infrastructure it has in place to extend the distribution of Kellanova’s brands. He predicted Mars would employ a playbook similar to the one it used with Kind after it purchased the rest of the bar maker in 2020. Mars has since rolled out Kind to roughly 30 new markets.
Arun Sundaram, an equity analyst at CFRA Research, said in a note to investors “this is a good marriage between two high-caliber food companies, as Mars is known for its innovation and brand building, while K has the global reach to bring more Mars products to more markets.”
‘Not their first rodeo’
The privately held Mars, with more than $50 billion in annual revenue in 2023, has been active in M&A throughout its history.
The company has turned to smaller bolt-on deals, such as its purchase of Kind and Kevin’s Natural Foods, and business-changing acquisitions, highlighted by the $23 billion acquisition of chewing gum maker Wrigley in 2008. Mars also deepened its presence in pets by adding companies like veterinary and dog day-care company VCA for nearly $8 billion six years ago.
McCarthy noted that while snacking “is not exactly [Mars’] sweet spot” in the way that confections is, and that doubling down on the category has some inherent risk, the company has proven skilled at integrating and benefiting financially from prior deals it has made. This stands in contrast to roughly 60% of acquisitions across the business landscape that don’t create shareholder value, he noted.
“Out of all the potential buyers for a business like [Kellanova,] Mars is amongst the best,” McCarthy said. This is not their first rodeo. They’ve done a number of acquisitions in the past … and in general, they’ve been implemented and executed very well.”
