Privately held Mars is buying Kellanova (NYSE:K), the snacks division of cereal giant Kellogg's. The stock will be bought for $83.50 per share. Before the announcement, K stock was selling for $74.50 per share. It was about $80 before the market opened today. CNN said the all-cash deal was worth $29.5 billion, but The New York Times said it was worth $35.9 billion. The difference is mainly due to the $5 billion in long-term debt Kellanova had on its balance sheet at the end of June. Split and Sell Something ...

Core Viewpoint - Mars is acquiring Kellanova for $35.9 billion, marking the largest deal in the packaged food industry in over a decade [1][3]. Group 1: Deal Details - Mars will pay $83.50 per share for Kellanova, which is a 12% premium over Kellanova's closing share price on Tuesday [1][2]. - The acquisition includes Kellanova's brands such as Eggo, Pop-Tarts, and Rice Krispies Treats [2]. - The deal has been approved by Kellanova's board but still requires shareholder and regulatory approval, with an expected closing in the first half of 2025 [2]. Group 2: Industry Context - This acquisition is the largest in the packaged food sector since Mars acquired Wrigley for $23 billion in 2008 [3]. - Mars has been actively diversifying its portfolio beyond chocolate products, especially as cocoa prices have risen [4]. - Kellanova was formed as a spin-off from Kellogg's, which announced a business split in 2022, resulting in Kellanova and WK Kellogg [4].

Acquisition Overview - Mars is acquiring Kellanova in a deal valued at nearly $30 billion, marking the largest acquisition in the packaged food industry [1] - The acquisition price is set at $83.50 per share, representing a 33% premium over Kellanova's closing price on August 2 [1] Company Profiles - Mars is known for its popular chocolate brands, including Snickers, M&Ms, and Milky Way, and is also the world's largest pet food maker [6] - Kellanova's brand portfolio includes Cheez-It, Pringles, and Eggo, and it focuses on salty snacks and cereals outside of North America [6][2] Market Context - The acquisition occurs amid slowing sales growth for US packaged food companies, as consumers are increasingly opting for cheaper private label products over branded items [2] - The deal surpasses Mars' previous acquisition of Wrigley, which was valued at $23 billion in 2008 [3] Regulatory Considerations - Legal experts believe the Mars-Kellanova deal is likely to withstand regulatory scrutiny, as there is limited overlap between their product offerings [5][6] - Antitrust lawyers suggest that it may be challenging for regulators to argue that the merger would raise prices or harm competition [5]

JHVEPhoto/iStock Editorial via Getty Images Nothing As Sure As Change What is the value for retail investors in owning WK Kellogg Co (NYSE:KLG) stock, the North American cereal business, after the October 2023 separation and potential sale of its snacks and food business? Most analysts rate the stock as Sell or Hold. We judge Kellogg stock as a potential buy opportunity, at this time. We are convinced the stock is at least a safe harbor in these tumultuous times, with upside potential as the cereal industry ...

Core Viewpoint - WK Kellogg Co reported Q2 results showing revenues in line with analyst estimates but weaker profitability, impacted by a social media boycott and ongoing industry challenges [1][3][12] Financial Performance - Q2 sales were $672 million, reflecting a year-on-year decline of -2.7%, slightly better than the consensus estimate of $671 million [3] - The adjusted EPS was $0.36, missing Wall Street estimates by $0.05, while the adjusted gross margin expanded to 30.2% [4] - Adjusted EBITDA margin decreased by 1.1 percentage points year-on-year to 11.6% but increased sequentially by 1.0 percentage points [4] Market Context - The cereal industry is facing overall weakness, with competitors like General Mills and Post Holdings reporting significant sales declines [3][8] - A boycott against WK Kellogg was promoted on social media, but its impact on sales was minimal compared to industry trends [3][12] Strategic Initiatives - WK Kellogg is modernizing its supply chain with planned capital investments of $390 million, aiming for a 5.0 percentage point adjusted EBITDA expansion by 2026 [6][7] - The company is reviewing its manufacturing footprint, which includes production increases in some plants and closures in others [7] Future Outlook - The company reaffirmed its 2024 financial guidance, expecting standalone adjusted revenues to remain flat with a slight decline of -1% to 1% growth [5] - Long-term growth prospects are concerning due to a shift in consumer preferences towards cheaper private label alternatives, which may impact branded cereal demand [8][12] Valuation Insights - A discounted cash flow model estimates WK Kellogg's fair value at $24.89, indicating a potential upside of 54% from the current stock price [10] - Peer valuation shows WK Kellogg is undervalued compared to competitors, with an EV/EBITDA of 5.4 versus an average of 14.2 for peers [11]

Acquisition Interest - Mars is exploring an acquisition of Kellanova, which has a market capitalization of $25.1 billion, potentially allowing Mars to diversify into the snacks business [1] - Kellanova's shares rose approximately 10% to $73.20 following the acquisition news, reflecting a 39% increase since its split from WK Kellogg Co [1][15] - Other potential suitors for Kellanova include Hershey, Mondelez, and Pepsi if the deal with Mars does not materialize [1] Financial Performance - Kellanova reported a 4.7% year-over-year decrease in net sales for Q2 2024, totaling $3.2 billion, primarily due to unfavorable foreign currency and last year's Russia divestiture [2][5] - On an organic basis, net sales increased by 4% year-over-year, indicating underlying growth despite external challenges [2][6] - Adjusted diluted EPS for Q2 2024 was $1.01, up 12.2% year-over-year, with a 14.4% increase to $1.03 when excluding currency impacts [2][5] Guidance and Outlook - Kellanova raised its FY24 organic net sales growth guidance to 3.5% or better, up from approximately 3% [4] - The adjusted operating profit guidance range was raised to approximately $1,875-1,900 million, reflecting strong currency-neutral growth [4] - Free cash flow expectations have also been increased to over $1 billion, supported by operational improvements [4][5] Segment Performance - North America saw a slight increase in net sales of 0.8% year-over-year to $1.7 billion in Q2 2024, with operating profit up 21.1% to $339 million [7][8] - In Europe, net sales decreased by 4.3% year-over-year to $639 million in Q2 2024, while operating profit increased by 6.7% to $111 million [9][10] - Latin America experienced a 2.1% increase in net sales to $333 million in Q2 2024, with operating profit rising 27.8% to $46 million [11][12] - AMEA's net sales decreased by 20.8% year-over-year to $564 million in Q2 2024, but organic sales increased by 16% [13][14] Valuation - The intrinsic value of Kellanova is estimated at $78.00 per share based on a 2025e EV/EBITDA multiple of 13.5x, which is a 7.5% discount to Mondelez International's multiple [3][15] - The company is trading at a discount compared to peers like Hershey and Mondelez, making it a potential acquisition target [1][15] - Sensitivity analysis indicates that changes in adjusted EBITDA and EV/EBITDA multiples could significantly impact the intrinsic value [16] Company Overview - Kellanova is a leader in global snacking, international cereal, and noodles, with a legacy of over 100 years and net sales of $13.1 billion for FY23 [17] - The company’s brand portfolio includes well-known products such as Pringles, Cheez-It, and Pop-Tarts, aiming to become the world's best-performing snacks-led powerhouse [17]

BATTLE CREEK, Mich., Aug. 6, 2024 /PRNewswire/ -- WK Kellogg Co (NYSE: KLG), today published its 2024 second quarter results in documents posted to the company website at https://investor.wkkellogg.com/news-events/events-and-presentations/default.aspx. Documents immediately available include: the financial press release and tables, GAAP reconciliations, and presentation slides. A Current Report on Form 8-K was furnished with the U.S. Securities and Exchange Commission and is available on its website at www. ...

Key Takeaways Kellanova beats profit and sales estimates and boosts its guidance as volumes increase in North and Latin America. North American sales rose 0.7% year-over-year, and volumes grew 2.0%. Kellanova shares rose about 5% in intraday trading Thursday. Shares of Pringles and Pop-Tarts parent Kellanova (K) rose in intraday trading Thursday as the cereal and snack food maker reported better-than-expected results and raised its guidance, boosted by North and Latin American demand. The company formerly k ...

Core Insights - Kellanova's second-quarter 2024 results showed both revenue and earnings exceeding Zacks Consensus Estimates, with a year-over-year increase in earnings despite a decline in overall sales [1][3][4] - The company has raised its guidance for 2024 following a strong first half, indicating confidence in future performance [1][11] Financial Performance - Adjusted earnings per share (EPS) reached $1.01, a 12.2% increase year over year, surpassing the Zacks Consensus Estimate of 90 cents [3] - Net sales totaled $3,192 million, exceeding the Zacks Consensus Estimate of $3,149 million, but reflecting a 4.7% decline year over year due to unfavorable currency movements and the divestiture of the Russia business [4] - Organic net sales increased by 4%, indicating growth when excluding currency and divestiture impacts [4] Segment Performance - North America segment sales were $1,658 million, up 0.8% year over year, driven by improved volumes [6] - Europe segment revenues were $639 million, down 4.5% year over year, impacted by volume pressures and the divestiture of operations in Russia, although partially offset by price/mix growth [7] - Latin America revenues reached $333 million, up 2.3% year over year, supported by favorable price/mix and volumes, with organic sales increasing by 4% [8] - Asia Pacific and Middle East & Africa segment revenues totaled $564 million, down 20.8% year over year due to unfavorable foreign currency rates, but organic sales jumped 16% [8] Cash Flow and Guidance - The company reported cash and cash equivalents of $272 million and long-term debt of $5,007 million [9] - Kellanova generated net cash from operating activities of $740 million year-to-date, with free cash flow of $443 million [10] - For 2024, the company expects organic net sales growth of 3.5% or more, adjusted operating profit in the range of $1,875-$1,900 million, and adjusted EPS between $3.65-$3.75 [11][12]

Kellanova (K) came out with quarterly earnings of $1.01 per share, beating the Zacks Consensus Estimate of $0.90 per share. This compares to earnings of $1.25 per share a year ago. These figures are adjusted for nonrecurring items. This quarterly report represents an earnings surprise of 12.22%. A quarter ago, it was expected that this the maker of Pringles and other snacks would post earnings of $0.85 per share when it actually produced earnings of $1.01, delivering a surprise of 18.82%. Over the last four ...