Pringles and Snickers may become a family
2024-08-11
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According to the Red Star Capital Bureau on August 11, recently, there was news that the international candy giant Mars is considering acquiring Kellanova, the parent company of Pringles potato chips.
The Red Star Capital Bureau sent a letter to Mars China to interview whether the above news is true. As of press time, the other party has not responded.
According to Blue Whale News, if the negotiations do not break down, the agreement may be reached soon. If the premium is included, the valuation of the transaction may reach about US$30 billion (about RMB 215 billion). According to reports, in addition to Mars, Oreo's parent company Mondelez International and chocolate giant Hershey are also bidding for Kellanova.
Red Star Capital noted that Kellanova was spun off from Kellogg's in October 2023. It inherited Kellogg's original global snack business, including salty snacks, snack bars, frozen breakfast foods, meat substitutes and other packaged foods, covering brands such as Pringles, Cheez-It and Rice.
Image from Kellanova official website
Mars owns many well-known brands including Dove, M&M's, Snickers, Extra, Rainbow, and Wrigley.
That is to say, if Mars successfully acquires Kellanova, Pringles potato chips, Dove, M&M's beans, Snickers and other brands will become one family.
At present, Kellanova has not publicly mentioned the sale and the reason. Judging from its financial report released on August 1, Kellanova's performance in the first half of the year is also remarkable.
Screenshot from Kellanova’s financial report
Financial report data shows that Kellanova's sales in the first half of 2024 were US$6.392 billion, a year-on-year decrease of 4.5%. However, if the impact of currency and asset divestiture is excluded, the company's sales in the first half of the year (ie organic sales) increased by 4.7% year-on-year; operating profit in the first half of the year was US$886 million, a year-on-year increase of 15.9%, of which the growth rate in the second quarter was faster at 18.0%.
Kellanova Chairman and President Steve Cahillane said the company once again delivered strong performance in the second quarter.
Also because of the "strong performance" in the first half of the year, Kellanova raised its full-year performance target for 2024, raising the organic sales target from 3% growth to 3.5%, and the operating profit target from US$1.85 billion to US$1.90 billion to US$1.875 billion to US$1.90 billion.
Screenshot from Kellanova’s financial report
Steve Cahillane also said: "Since the spin-off last fall, Kellanova has maintained this level of performance growth, which is a strong demonstration that Kellanova is now a more focused, growth-oriented and more profitable company."
The outlook for the company's future performance is not bad, so why sell the company?
Shen Meng, executive director of Xiangsong Capital, told Red Star Capital on August 11 that corporate mergers and acquisitions are based on resource integration and profit expansion. If the acquisition can further expand the rights and interests of the buyer, seller and the whole, then a deal may be reached. Regarding the advantages of Mars in this acquisition, Shen Meng believes: "Mars has Buffett behind it, has a reputation for long-term value investment, and supports companies to optimize their development strategies."
Red Star Capital learned that in 2008, Mars teamed up with Buffett to acquire Wrigley, the largest chewing gum manufacturer in the United States, for $23 billion. Earlier, Mars consolidated its position in the global food industry by acquiring Dove. In February this year, Mars also announced the acquisition of British high-end chocolate brand Hotel Chocolat for 534 million pounds, thus entering the high-end chocolate track.
If the acquisition of Kellanova goes smoothly, Mars, whose food business is mainly sweet snacks, will also make great progress in the salty snack segment.
Red Star News reporter Zhang Luxi
Editor: Yang Cheng
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