Mars to buy Kellanova for nearly $36 billion

Shares of Kellanova (K) are rising after Mars Inc. struck a $35.9 billion deal for the maker of household brands like Cheez-Its and Pringles. Yahoo Finance Senior Reporter Brooke DiPalma joins Morning Brief to break down the news as Mars, the maker of Milky Way and 3 Musketeers candy bars, seeks to establish itself as a global snacking company.

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This post was written by Melanie Riehl

Video transcript

Striking nearly $36 billion deal for K over the maker of well known brands like cheeses and Pringle shares A K over.

They're jumping on the news of just about 7% in the free market.

Brook.

The has been tracking this and is here to break it all down for us.

Brook.

Yeah, good morning to both the pretty sweet and salty deal, I guess you could say were $36 billion here in including that in this all cash deal.

Now, it's important to note here that it's expected to close in the first half of the year so that A was announced today, but it will close are expected to close the first half of 2025 and C saying in a note this morning that they do not expect any regulatory approval issues around this acquisition.

But this really comes at a time where Mars is really doubling down on being and uh presenting itself as a global snacking company.

We know that these are two snacking powerhouses, one that specializes in chocolate and gum, the other in those salty snacks.

And this accelerates Mar's objective of doubling and snacking business and also it's proving its distribution as well and priority international markets like Latin America as well as Africa.

Now investors or analyst rather also noting that they don't believe that this will kick off a round of large deal acquisitions perhaps from other companies as well.

But right now, we do know that the snacking business overall has been under a bit of pressure as these companies are really looking to reignite and drive revenue growth at a time when we're seeing weak volume because the consumers are pulling back because those prices that they've seen, we heard from the Ceo of Kela Nova on their earnings call that consumers under $100,000 in household income with kids.

They were seeing a bit of price sensitivity within that category.

And then we recently heard from Campbell's Soup Ceo.

He recently spoke to our Brian Sazi about after three years of bus growth.

Mark Klaus said they're being seeing a bit of a slow down.

Take a listen here.

I think what you did see in this quarter was a little bit of the, the normalization of that growth line and some building or mounting pressure as it relates to the economy in general.

And what Mark went on to say is that snacking historically tends to be resilient.

And what we've seen over the past four years is that consumers are really doubling down on convenience and on the go snacking in their lifestyle as they really get back out following the pandemic.

And so despite this slow down investors, Wall Street and certainly Mark himself believes that it still going to be resilient and come out on top.

It's about $135 billion overall snacking industry according to Nielsen.

Yeah, big consolidation in the confectionery and the snacking space.

It's in the suite.

We got to love it.

Even last year we had seen Smucker acquire hostess brand.

So some big deals trying to get into the pantries.

Of course.

Exactly.