(Reuters) – Mars, the family-owned food giant whose confectionary brands include M&M’s and Snickers, is considering buying Kellanova, the maker of snacks such as Cheez-It and Pringles, according to people familiar with the matter. ).
Given Kellanova’s market capitalization of $22 billion, the deal would be one of the largest ever in the packaged food industry and test the appetite of U.S. regulators to allow consolidation in the industry.
Kellanova’s shares are up about 20% since it was spun off from Kellogg Co (NYSE: ) Co last October, but it still trades at a discount to some peers such as Hershey and Mondelez (NASDAQ: ) International, making it a A company with potential.
It’s unclear whether Kelanova will approach Mars and seek a deal, the sources said. The source added that Kelanova may also be approached by another suitor, but there is a risk that no deal can be reached with either party.
Kelanova declined to comment, and a Mars spokesman did not immediately respond to a request for comment.
Trading in the packaged food sector has been strong as companies seek scale to counter the impact of rising prices and drug losses on demand. But many of the deals are smaller than the mega-merger Heinz and Kraft struck nearly a decade ago as U.S. antitrust regulators grow increasingly concerned about the impact of large deals on consumers.
Kellanova specializes in snacks such as cookies, toaster pastries and cereal bars, as well as convenience foods such as ready-to-eat cereals, frozen waffles, vegetarian options and noodles. The company manufactures its products in 21 countries and sells them in more than 180 countries.
Mars is a family-owned company whose consumer products include snacks and pet food. It also operates veterinary care centers and has a veterinary diagnostics business.
