Kellanova's Independent Days are Numbered, as Its Marriage With Privately Held Mars Looms

After untangling its operations in October 2023, Kellanova has centered its strategic playbook largely on the faster-growing global snacking category, which accounts for more than half its sales. The attractiveness of this exposure wasn't lost on privately held Mars (which owns brands such as M&Ms, Twix, and Snickers), as it now intends to bring Kellanova's snacking brands under its umbrella in a nearly $36 billion deal. The combined firm would sit as one of the leading operators in the packaged food space, with $60 billion-$70 billion in annual sales and a portfolio of 17 billion-dollar brands. But despite the opportunity to buoy sales, we note this deal runs in stark contrast to efforts across the industry the past several years to slim down to unlock the benefits of focus. As such, we wouldn’t be surprised if Mars ultimately opted to shed some ancillary brands in time, such as Morningstar Farms.