Shoppers fear Cheez-It and Pringles prices will rise after Mars candy giant buys companies in massive $36 billion deal

CANDY giant Mars announced its plan to acquire Kellanova, the maker of Cheez-It and Pringles, on Wednesday.

This landmark deal, valued at nearly $36 billion, is the largest transaction in the packaged food industry to date – but shoppers fear price increases.

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As news of the merger made headlines, consumers began to worry about increased prices for Pringles and Cheez-It products.

“Mark my words [sic],” wrote one person on X , “Pringles and cheese it will increase and retail cost by about another dollar and another dollar by the end of next year.

“Mergers are bad for the economy And the consumer gets the worst of it,” they added.

“Get ready to pay $12 for a can of pringles…” commented someone else on Reddit .

ABOUT THE ACQUISITION

Under the terms of the all-cash deal, Mars will pay $83.50 per share for Kellanova .

This represents a significant 33% premium over Kellanova’s closing price on August 2, just before news of the acquisition discussions first broke, per CNBC .

Following the announcement, Kellanova’s shares surged approximately 8% to $80.45 in pre-market trading.

The acquisition values Kellanova at an equity level of $28.58 billion, according to calculations by Reuters .

The deal comes amid a challenging landscape for US packaged food companies like Kraft Heinz , Mondelez , and Hershey, which are experiencing a slowdown in sales growth.

Consumers, facing tighter budgets, are increasingly opting for cheaper private-label products over higher-priced branded items.

This acquisition outstrips Mars’ previous $23 billion takeover of Wrigley in 2008 and promises to consolidate an impressive array of consumer brands.

DEALS DEALS DEALS

Alongside Mars’ beloved chocolate offerings—such as Twix, Bounty, and Milky Way—Kellanova offers a diverse snacks portfolio, including Pop-Tarts, Rice Krispies Treats, and Eggo frozen waffles.

Legal experts suggest that the acquisition is unlikely to encounter significant antitrust challenges, as there is limited overlap between the two companies’ product lines.

Following the deal’s completion, expected in the first half of 2025, Kellanova will join Mars Snacking, led by Global President Andrew Clarke and based in Chicago .

INSIDE THE MEGA BUCKS DEAL

In the recently announced acquisition deal with Mars, a termination fee of $1.25 billion will be payable by Mars if it does not obtain the required regulatory approvals.

Additionally, Kellanova will owe Mars $800 million if there is a shift in the board’s recommendation.

Mars intends to fund the $36 billion acquisition using a mix of cash and new debt.

Citi is acting as the financial adviser for Mars, while Goldman Sachs is advising Kellanova on the transaction.

Kellanova, which officially separated from WK Kellogg in October 2023, has its roots in the salty snacks sector and also sells cereal products outside of North America .

WK Kellogg retained the North American cereal business following the split.

CFRA Research’s Arun Sundaram told Reuters, “It’s now clear why Kellanova went through the spin-off of its slow-growing domestic cereal business last year.

“We may see more packaged food companies divest or spin off slower-growing segments of their portfolios to attract new buyers.”

In 2023, Kellanova reported net sales exceeding $13 billion, highlighting its strong market position.

Investment firm TOMS Capital Investment Management reportedly took a “significant” stake in Kellanova as of May and was engaged in discussions with the company to enhance shareholder returns.

In the recently announced acquisition deal with Mars, Mars will incur a termination fee of $1.25 billion if it fails to secure necessary regulatory approvals.

Kellanova will owe Mars $800 million if there is a change in the board’s recommendation.

Mars plans to finance the $36 billion acquisition through a combination of cash and new debt.

Citi serves as Mars’s financial adviser, while Goldman Sachs advises Kellanova on the transaction.

Mars and Kellanova aren’t the only companies dealing with major changes.

Chili’s Bar and Grill has closed one of its locations. Many customers only discovered the closure when they noticed U-Haul vans outside.

Plus, the CEO of another restaurant chain has issued a concerning warning in light of numerous closures across the industry.