August 19, 2024 | Consumer Discretionary | North America | Active
Privately-held snacking giant Mars announced on 14-Aug-24 that it has entered into an agreement to acquire Kellanova, the savoury snack maker behind Pringles and Cheez-It crackers, for $35.9bn, in what is the largest M&A deal globally this year. Under the agreement, Mars is offering Kellanova shareholders $83.50 per share in cash, representing a 32.6% premium to the target’s undisturbed price on 2-Aug-24, the day before media reports surfaced concerning a merger. This is also a 46.5% premium to Kellanova’s share price on 2-May-24, when Reuters disclosed that activist investor TOMS Capital Investment Management had taken a ‘significant’ position in the company. The agreement, which is unanimously approved by Kellanova’s board, is subject to target shareholder approval and regulatory clearances, namely HSR, which is expected to be filed by 27-Aug-24. The WK Kellogg Foundation Trust and the Gund Family, who together hold 20.7% of Kellanova, have agreed to vote in favour of the transaction. The merger agreement requires both companies to use their reasonable best efforts to secure regulatory approvals, including offering divestments, if necessary. However, Mars is not required to divest any of its own businesses or brands and any divested Kellanova assets must not have generated more than $750m in 2023. The merger parties have committed to defending and contesting any legal action that seeks to block the merger. Kellanova, formerly known as The Kellogg Co., spun off its North American cereal unit, WK Kellogg (KLG US), in 2023, leaving Kellanova as the legacy business. Consequently, Kellanova / Mars also requires a tax opinion to confirm that the transaction does not impact the tax treatment of WK Kellogg’s separation. However, the opinion is not a condition to closing if it is not received for reasons unrelated to a material change in law or facts. Otherwise, the merger agreement includes standard representations, warranties, and covenants, including a Material Adverse Change clause with carve-outs for pandemics and wars. Kellanova is also subject to ...
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