Mars may be in talks to buy Kellanova: Reuters
Reuters is reporting that Mars, well-known for its popular snacks as M&M’s, Mars Bars and Snickers, is exploring the possibility of acquiring Kellanova, makers of such popular snacks as Pringles, according to people familiar with the matter
If the acquisition were to happen, it would be one of the largest such buys in the packaged food sector, according to analysts. However, neither Kellanova nor Mars have publicly commented on the reports. According to Reuters, news sent shares of Kellanova up some 20%.
The Financial Times says that Mars has turned to acquisitions to help fuel growth, “including the $9.1bn purchase in 2017 of VCA, a group of 800 petcare hospitals. In 2008, it paid $23bn deal for chewing gum and snacks maker Wm Wrigley Jr. Earlier this year, Mars acquired UK-based premium chocolatier Hotel Chocolat for £534mn.”
READ: Kellanova completes separation of North American cereal business
On August 1, Kellanova released its results for its second quarter of 2024. It reported that its net sales in the second quarter were negatively impacted by adverse currency translation and the 2023 divestiture of its business in Russi. Its organic-basis growth remained within its long-term target range.
"We delivered another strong financial performance in the second quarter. Our top-line growth featured a return to volume growth in two of our Regions, and improvements in other markets, led by our biggest brand Pringles. This was supported by fully restored commercial activity, including a double-digit increase in brand building investment while still improving profit margins," commented Steve Cahillane, Kellanova’s chairman, president and chief executive officer upon the release of the quarterly results. "This level of performance, which has been sustained since our spin-off last fall, provides clear evidence that Kellanova is a more focused, more growth-oriented, and more profitable Company today."
Kellanova’s North America’s net sales in the second quarter increased slightly year on year, both on a reported and organic basis, driven by a return to volume growth. North America's second-quarter reported operating profit increased by 21% year-on-year, reflecting improving gross profit margin and reimbursement for expenses related to transition services provided to WK Kellogg Co, partially offset by increased brand building investment. On an adjusted and currency-neutral adjusted basis, operating profit increased by 25%.
Reported operating profit increased 23%, reflecting improving gross profit margin and reimbursement for expenses related to transition services provided to WK Kellogg Co, partially offset by increased brand building investment and higher up-front charges related to the separation and a network optimization project. On an adjusted and currency-neutral adjusted basis, operating profit increased by 32%.
The company added that in North America consumers would see for the remainder of 2024, an increased focus on brand building and merchandising, food innovation and operating a more focused growth portfolio.
