Food giant Mars has announced it is buying snacks and cereal company Kellanova in a deal worth $36bn (£28bn).
The mega-merger will unite brands such as Mars chocolate bars, Snickers, and M&M’s, along with pet food ranges such as Whiskas, with products such as Pop-Tarts, Pringles, and a host of household-name cereals.
It is thought to be the biggest corporate takeover to be announced this year.
The companies hope the move will allow their brands to be sold even more widely around the world.
Kellanova’s chief executive Steve Cahillane told CNBC: “They [Mars] have a huge China business, we have a very small [one]… Imagine the Pringles that we can sell in China.
“Think about our Africa business, where we have a big business and they have a small business. How many M&M’s and Twix [bars] can we sell in Africa?”
He added: “The complementary nature really supported the industrial logic [of the deal].”
It comes after Kellogg’s split into two companies – Kellanova and WK Kellogg Co – in October last year.
WK Kellogg Co was spun off to focus entirely on making cereals for the North American market, while Kellanova took over responsibility for products in the rest of the world, including the UK. It also continues to manufacture other food brands in the US.
Kellanova’s most famous cereals made for the UK market include Corn Flakes, Coco Pops, and Rice Krispies.
The packaged food industry has been grappling with stalled growth following years of price rises amid high inflation in many international markets.
However, Mars chief executive Poul Weihrauch said he was confident the merger would be a big success and help his firm to grow further.
He added: “This is a story about two iconic American businesses coming together… It’s really a perfect fit.”
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The deal is expected to be completed in the first half of 2025, but must first get approval from competition regulators.
However, Mr Cahillane said he was confident permission would be granted.
Analysts have also said the products sold by the two companies mostly do not overlap, meaning regulators, including the UK’s Competition and Markets Authority, may have limited grounds to block the deal.
Steve Cahillane said he would leave Kellanova after the completion of the deal. Pic: AP
But some commentators have also argued the size of the firms involved could be a stumbling block.
Seth Bloom, a former lawyer for the US Senate’s antitrust subcommittee, said earlier this month: “There is significant risk that, just because these companies are so large and leaders in their segments, they will attract regulatory scrutiny.”
Under the terms of the deal, Mars will pay $83.50 per share for Kellanova, a 33% premium on its closing price on 2 August before reports of the takeover emerged.
Following completion, Kellanova will become a part of Mars Snacking under the leadership of global president Andrew Clarke, with Mr Cahillane leaving the combined company.