Shares in Pringles maker Kellanova jump on Mars bid talks

Original Article:

Source: Link

Shares in the Pringles maker Kellanova have surged nearly 20% after it emerged that the family-owned snacks company Mars was considering a takeover of the $27bn (£21bn) company. Stock in Kellanova, formerly known as Kellogg’s, rose 18% in early trading on Monday after Reuters reported that Mars was interested in buying the company, known for snacks brands such as Rice Krispies Treats and Pop-Tarts, in what would be one of the biggest ever deals in the packaged food sector. “We believe that K’s portfolio of popular snack brands will fit well with Mars’ and help them expand scale in international markets,” said Robert Moskow, an analyst at TD Cowen. Dealmaking in the packaged food sector has picked up since last year, including Campbell Soup’s $2.3bn buyout of the Rao’s pasta sauce owner Sovos Brands and J.M. Smucker’s acquisition of the Twinkies maker Hostess Brands for $5.6bn. Analysts have said Kellanova’s deal with Mars could usher in more consolidation in the sector. Kellanova shares rose to $74.33 on Monday even as broader US stocks fell on fears of the country tipping into recession. Kellanova, based in Chicago, had a market value of about $27bn, including debt, on Friday, before news of Mars’ interest emerged. In its second-quarter results, the company raised its annual sales and profit forecasts, owing to steady demand for its largest brand, Pringles, and effective promotions. One US analyst said he expected Kellanova to fetch upwards of $87 a share in any takeover deal, and said the Cadbury’s owner Mondelez could also be a suitor. “Mondelez could be seen as another potential acquirer, though we view the implied leverage as a limiting factor,” said Brian Holland, of DA Davidson. Kellanova made up the global snacking business of Kellogg’s, before the packaged food giant spun off its slow-growing North America cereal division WK Kellogg last October. skip past newsletter promotion Sign up to Business Today Free daily newsletter Get set for the working day – we'll point you to all the business news and analysis you need every morning Enter your email address Sign up Privacy Notice: Newsletters may contain info about charities, online ads, and content funded by outside parties. For more information see our Newsletters may contain info about charities, online ads, and content funded by outside parties. For more information see our Privacy Policy . We use Google reCaptcha to protect our website and the Google Privacy Policy and Terms of Service apply. after newsletter promotion Sales growth at US packaged food companies such as Kraft Heinz, Mondelez and Hershey have taken a hit as cost-conscious customers save their dollars for essential purchases and hunt for cheaper, private-label alternatives to pricier branded items. “At times like this when growth slows, balance sheets are relatively clean, and valuations dip, the market leaders in food tend to look more closely at big combinations to drive cost synergies,” TD Cowen’s Moskow said.