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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
Mars is striking a nearly $36 billion dollar deal for Kellenova, the maker of well-known brands like Cheez-Its and Pringles. Shares of Kellenova, they're jumping on the news up just about 7% in the pre-market. Brooke DiPalma has been tracking this and is here to break it all down for us, Brooke.
Yeah, good morning to you both. A pretty sweet and salty deal, I guess you could say, worth $36 billion dollars here in including debt 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 the acquisition was announced today, but it'll close, or expected to close first half of 2025. And Stiefel saying in a note this morning that they do not expect any regulatory approval issues around this acquisition. But this really comes in a time where Mars is really doubling down on being and 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 Mars objective of doubling its snacking business, and also improving its distribution, as well as in priority international markets, like Latin America, as well as Africa. Now, investors, or analysts rather, also noting that they don't believe that this will kick off a round of large deal acquisitions, perhaps some 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 of those prices that they've seen. We heard from the CEO of Kellenova 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 Sozzi about after three years of robust growth, Mark Klaus, they're being seeing a bit of a slowdown. 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 lifestyles as they really get back out following the pandemic. And so, despite this slowdown, investors, Wall Street, and certainly Mark himself believes that it's still going to be resilient and come out on top. It's about $135 billion dollar overall snacking industry, according to Nielsen.
Yeah, big consolidation in the confectionary and the uh snacking space. I mean, even last year we had seen Smucker acquire Hostess brands. So, uh, some some big deals trying to get into the pantries of course.
Salty and sweet. We got to love it.
Exactly.