Mars acquires Kellanova in $36bn mega deal

BY Fraser Tennant

In what is 2024’s biggest announced deal to date, US multinational manufacturer of confectionery Mars is to acquire food manufacturing company Kellanova – a transaction that unites two businesses with complementary footprints and brand portfolios.

Under the terms of the definitive agreement, Mars will acquire Kellanova for $83.50 per share, for a total consideration of $35.9bn, including assumed net leverage. Mars intends to fully finance the acquisition through a combination of cash-on-hand and new debt, for which commitments have been secured.

All of Kellanova’s brands, assets and operations, including its snacking brands, portfolio of international cereal and noodles, North American plant-based foods and frozen breakfast, are included in the transaction.

“This is a truly historic combination with a compelling cultural and strategic fit,” said Steve Cahillane, chairman, president and chief executive of Kellanova. “Kellanova has been on a transformation journey to become the world’s best snacking company, and this opportunity to join Mars enables us to accelerate the realisation of our full potential and our vision.

“The transaction maximises shareholder value through an all-cash transaction at an attractive purchase price and creates new and exciting opportunities for our employees, customers and suppliers,” he continued. “We are excited for Kellanova’s next chapter as part of Mars, which will bring together both companies’ world-class talent and capabilities and our shared commitment to helping our communities thrive.”

The transaction has been unanimously approved by the board of directors of Kellanova.

“In welcoming Kellanova’s portfolio of growing global brands, we have a substantial opportunity for Mars to further develop a sustainable snacking business that is fit for the future,” said Poul Weihrauch, chief executive of Mars, Incorporated. “We will honour the heritage and innovation behind Kellanova’s incredible snacking and food brands while combining our respective strengths to deliver more choice and innovation to consumers and customers.”

The transaction is subject to Kellanova shareholder approval and other customary closing conditions, including regulatory approvals, and is expected to close within the first half of 2025.

Mr Cahillane concluded: “With a proven track record of successfully and sustainably nurturing and growing acquired businesses, we are confident Mars is a natural home for the Kellanova brands and its employees.”

News: Mars to buy Pringles maker Kellanova for $36 bln in 2024's biggest deal

Algonquin to sell renewable energy unit in $2.5bn deal

BY Richard Summerfield

LS Power has announced it is to acquire Algonquin Power & Utilities Corp’s renewable energy business in a deal worth around $2.5bn.

The transaction is expected close in Q4 2024 or Q1 2025, subject to the satisfaction of customary closing conditions, including the approval of the US Federal Energy Regulatory Commission, and approval under applicable competition laws.

The acquisition of LS Power is intended to help Algonquin reduce its debt and boost its earnings. The company had long-term debt of about $8.3bn at the end of June, following a series of acquisitions in recent years.

Under the terms of the deal, LS Power will acquire more than 3GW of operating renewable energy assets, along with another 8GW of projects under development. Around 2700MW of the portfolio’s operating assets are located in the US, across the NYISO, MISO, PJM, ERCOT and CAISO markets. The remaining 300MW of generation assets are located in Canada. Algonquin is the parent company of Liberty Utilities, which provides electricity, water, and natural gas utility services to more than 1 million customers.

According to LS Power, wind and solar projects comprise the bulk of the acquisition, which includes 44 operating sites. The development pipeline includes solar, wind, battery energy storage, and renewable natural gas projects in various stages of development.

“We are pleased to announce this important transaction with LS Power, which is the result of a highly competitive strategic sale process,” said Chris Huskilson, chief executive of Algonquin. “This major milestone, coupled with our previously announced agreement to support the sale of our Atlantica shares, delivers on our plan to transform AQN into a pure play regulated utility, optimize our regulated business activities, strengthen our balance sheet, and enhance our quality of earnings. We are confident that our path towards a pure play regulated utility supports our objective to create long term value for our customers and shareholders.

“The renewable energy business is a compelling and competitive business with scale and strong assets,” he continued. “That strength is a direct result of our employees’ hard work and dedication over the last three-plus decades, and I want to thank them for being an integral part of that effort. AQN and LS Power will work closely together to ensure a smooth transition.”

“This represents a significant strategic investment in and expansion of LS Power’s renewable energy portfolio,” said Paul Segal, chief executive of LS Power. “This business complements our existing fleet of more than 19,000MW of top-performing renewable, energy storage, flexible gas and renewable fuels projects. We believe this platform will play a significant role in meeting the challenges of rising electric demand and advancing the energy transition.”

News: Algonquin to sell majority of renewables unit for up to $2.5 bln to ease debt

Carlsberg to acquire Britvic in $4.2bn deal

BY Richard Summerfield

Danish brewer Carlsberg has agreed to buy UK soft drinks maker Britvic in a deal worth around $4.2bn.

Following two unsuccessful attempts to acquire the company in June, which Britvic said significantly undervalued it, Carlsberg returned with a sweetened bid of 1315 pence per share – comprising cash and a special dividend of 25 pence a share. The rejected bids priced shares at 1200p and then at 1250p apiece.

Carlsberg expects the deal to deliver a number of benefits, including cost and efficiency savings worth $128m over five years, thanks to common procurement, production and distribution networks. Carlsberg plans to name the new beverage business Carlsberg Britvic.

The deal will also expand Carlsberg’s existing relationship with PepsiCo. Britvic bottles PepsiCo drinks in the UK and Ireland while Carlsberg bottles products for the US giant in other countries such as Norway and Sweden. To facilitate the acquisition of Britvic, PepsiCo agreed to waive a change-of-control clause in its contract with the UK firm.

“Britvic is an outstanding business with a strong heritage built on its portfolio of family-favourite brands, long-standing customer relationships, a well-invested supply chain infrastructure and a fantastic team of people across multiple markets,” said Ian Durant, non-executive chair of Britvic. “All these factors have supported a consistent track record of delivery for Britvic’s stakeholders over a sustained period of time.

“The proposed transaction creates an enlarged international group that is well-placed to capture the growth opportunities in multiple drinks sectors,” he continued. “Crucially, to remain competitive at a time when the market is being shaped by the trend of increasing consolidation among bottling partners, Carlsberg’s agreement with PepsiCo provides the combined group with a strong platform for continued success.”

“With this transaction, we are combining Britvic’s high-quality soft drinks portfolio with Carlsberg’s strong beer portfolio and route-to-market capabilities, creating an enhanced proposition across the UK and markets in Western Europe,” said Jacob Aarup-Andersen, chief executive of Carlsberg. “The proposed transaction is attractive for shareholders of Carlsberg, supporting our growth ambitions and being immediately earnings accretive and value accretive in year three.

“We are committed to accelerating commercial and supply chain investments in Britvic, and we are confident that Carlsberg Britvic will become the preferred multibeverage supplier to customers in the UK with a comprehensive portfolio of market-leading brands,” he added.

“We are looking forward to building on our long-standing and successful partnerships with both Carlsberg and Britvic,” said Silviu Popovici, chief executive of PepsiCo Europe. “We believe that the combination of Carlsberg and Britvic will create even stronger sales and distribution capabilities for our winning brands in important markets. We look forward to continuing to expand the partnership into further important markets in the future.”

News: Carlsberg to buy Britvic for $4.2 billion

Saks parent HBC acquires Neiman Marcus in $2.65bn deal

BY Fraser Tennant

In a deal that gives them stronger negotiating power with vendors and greater ability to control costs, Saks Fifth Avenue parent HBC will acquire department-store chain Neiman Marcus for a total enterprise value of $2.65bn.

HBC is financing the deal via a $1.15bn fully committed term loan financing from investment funds and accounts managed by affiliates of Apollo, and a $2bn fully committed revolving asset-based loan facility from Bank of America, Citigroup, Morgan Stanley, RBC Capital Markets and Wells Fargo.

The deal has been struck at a time when luxury retailers are battling slowing demand as high interest rates and inflation force customers to reduce budgets, following a luxury retail boom after the coronavirus (COVID-19) pandemic.

Upon the close of the transaction, HBC will establish Saks Global, a combination of world-class luxury retail and real estate assets, including Saks Fifth Avenue, Saks OFF 5TH, Neiman Marcus and Bergdorf Goodman – each of which will continue operations under their respective brands.

“We are thrilled to take this step in bringing together these iconic luxury names,” said Richard Baker, executive chairman and chief executive of HBC. “For years, many in the industry have anticipated this transaction and the benefits it would drive for customers, partners and employees.”

The boards of directors of HBC and Neiman Marcus Group have approved the transaction.

“This transaction is a testament to our team's unwavering commitment to building rewarding customer relationships, driven by our differentiated business model,” said Geoffroy van Raemdonck, chief executive of Neiman Marcus Group. “We believe this is a proactive choice in an evolving retail landscape that will create value for our customers and brand partners.”

The transaction is subject to the receipt of required regulatory approvals, and other customary closing conditions. Until closing, the companies will continue to operate separately.

Mr Baker concluded: “This is an exciting time in luxury retail, with technological advancements creating new opportunities to redefine the customer experience, and we look forward to unlocking significant value for our customers, brand partners and employees.”

News: Saks owner to buy luxury retailer Neiman Marcus in $2.65-billion deal

Boeing acquires Spirit in $4.7bn aero deal

BY Fraser Tennant

In a move that sees it repurchase its former subsidiary, global aerospace company Boeing is to acquire aerostructures manufacturer and supplier Spirit AeroSystems in an all-stock transaction valued at approximately $4.7bn.

Under the terms of the definitive merger agreement, Boeing will acquire Spirit for $37.25 per share in Boeing common stock, which represents a 30 percent premium to Spirit’s closing stock price of $28.60 on 29 February 2024.

Boeing has long pondered buying back its former subsidiary, which aerospace analysts say has struggled to thrive independently despite diversifying into work for Europe’s Airbus and others.

“We believe this deal is in the best interest of the flying public, our airline customers, the employees of Spirit and Boeing, our shareholders and the country more broadly,” said Dave Calhoun, president and chief executive of Boeing. “By reintegrating Spirit, we can fully align our commercial production systems, including our safety and quality management systems, and our workforce to the same priorities, incentives and outcomes – centred on safety and quality.”

Boeing’s acquisition of Spirit will include substantially all Boeing-related commercial operations, as well as additional commercial, defence and aftermarket operations. As part of the transaction, Boeing will work with Spirit to ensure the continuity of operations supporting Spirit’s customers and programmes it acquires, including working with the US Department of Defence and Spirit defence customers regarding defence and security missions.

“After carefully evaluating Boeing’s offer to combine, we are confident this transaction is in the best interest of Spirit and its shareholders, and will benefit Spirit’s other stakeholders,” said Patrick M. Shanahan, president and chief executive of Spirit. “Bringing Spirit and Boeing together will enable greater integration of both companies’ manufacturing and engineering capabilities, including safety and quality systems.”

Concurrently with the closing of Spirit’s acquisition by Boeing, Spirit has entered into a binding term sheet with Airbus. Under the term sheet, the parties will continue to negotiate in good faith to enter into definitive agreements for Airbus to acquire certain Spirit assets that serve Airbus programmes.

The definitive merger agreement with Boeing and the term sheet with Airbus have been unanimously approved by the board of directors of Spirit.  

Mr Shanahan concluded: “We are proud of the part we have played in Airbus’ programmes and believe bringing these programs under Airbus ownership will enable greater integration and alignment.”

News: Spirit Aero to be broken up as Boeing agrees $4.7 billion stock deal