MERGER FEVER RISING AS GROWTH COOLS FOR HIGH-PRICED GROCERIES
“Any board member of a consumer-packaged-goods company who is watching Kellanova-Mars play out would have to assess whether that could be a path for their future,” said Robert Moskow, a TD Cowen analyst.
By Jesse Newman, The Wall Street Journal
Mars’s nearly $30 billion deal for Kellanova would push the company, known for M&M’s and Snickers, into supermarkets’ chips and cracker aisles, handing Mars a larger share of a growing global snacks business.
The agreement, one of the biggest on record among food makers, comes as consumers are balking at higher grocery prices and scrutiny is growing over the potential health impacts from processed food.
Conditions are ripe for a fresh wave of consolidation as food companies’ sales growth slows and their stock-market valuations are depressed, according to Wall Street analysts and consultants.
Pandemic-era pantry stocking and sharp price increases that continued in its aftermath fueled a sales boom for food companies. That growth has cooled, prompting executives to search for new ways to boost their businesses and cut expenses.
“Everybody’s kind of getting their mojo back, but looking for growth,” Kellanova Chief Executive Steve Cahillane said in an interview Wednesday.
Smaller food deals are already underway.
- Soup-and-snack giant Campbell Soup this year purchased Sovos Brands, the owner of Rao’s pasta sauce, for $2.7 billion.
- J.M. Smucker paid $4.6 billion for Twinkie-maker Hostess Brands.
- In recent months Kraft Heinz has been evaluating a potential sale of hot dog and bacon brand Oscar Mayer, The Wall Street Journal has reported.
- Food-industry analysts have said companies like potato-chip supplier Utz, as well as Simply Good Foods and BellRing Brands, are other possible takeover targets.
Many of Mars’s recent acquisitions have focused on foods perceived as healthier, though Mars CEO Poul Weihrauch said Wednesday that Mars was drawn to Kellanova’s broad portfolio.
He said brands like NutriGrain and RX Bar fit well into Mars’s plan to boost its healthy offerings. At the same time, Weihrauch said he is a big fan of sour-cream-and-onion-flavored Pringles, sold in telltale green canisters in grocery aisles.
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