Chocolate giant Mars said it would buy rival snack company Keranova for about $30 billion, the largest acquisition ever in the packaged food industry.
The privately held company, which makes popular chocolate bars such as Snickers, M&Ms and Milky Way, said it had agreed to buy Keranova in cash for $83.50 per share, or a 33 percent premium to the company’s Aug. 2 closing price. According to the Wall Street Journal.
Keranova’s portfolio of brands includes Cheese-It, Pringles and Eggo. Shares closed at $74.50 a share on Tuesday. They closed at $80.26 on Wednesday, up 7.7 percent.
The deal comes as U.S. packaged-food companies including Kraft Heinz, Mondelez and Hershey are seeing sales growth slow as budget-strapped customers opt for cheaper private-label products rather than pricier branded goods.
The deal, which exceeds Mars’ $23 billion acquisition of Wrigley in 2008, will bring together popular consumer brands including Mars’ Twix, Bounty and Milky Way chocolates and Kera Nova snack products such as Pop-Tarts, Rice Krispie Treats and Egg-O’-Frozen Waffles.
Legal experts told Reuters they believe the deal could withstand regulatory scrutiny arising from concerns it may violate antitrust laws.
In February, the Federal Trade Commission, led by Chair Lina Khan, challenged Kroger’s $24.6 billion acquisition of rival supermarket chain Albertsons.
The FTC argued that the deal would “eliminate robust competition between Kroger and Albertsons and increase the prices of groceries and other necessities for millions of Americans.”
Kroger defended the deal, saying it has lowered prices every year since 2003 and that it would apply that business model to the combined company.
If U.S. regulators decide to challenge the Mars-Keranova merger, it may be difficult for them to convince an antitrust judge that a merger between Mars and Kelanova would raise prices or stifle competition in the market, according to interviews and memos from six antitrust lawyers and industry analysts.
That’s because there is limited overlap in the companies’ product offerings: Mars’ portfolio includes brands like Twix, Bounty and Milky Way, and is focused on chocolate and other candies and sweets.
The company is the world’s largest pet food manufacturer and a major operator of animal medical centers.
Kelanova, which was spun out from WK Kellogg in October last year, operates the salty snacks business in the US and around the world, and sells cereal outside North America.
WK Kellogg took over the North American cereal business of its former parent company, Kellogg’s.
With post wire
