Mars Inc has issued US$26 billion in senior notes in a private transaction to fund its acquisition of snacking company Kellanova, formerly Kellogg’s.
The offering is expected to close on or around 12 March 2025.
The Kellanova deal was first announced last August, with Mars agreeing to acquire all the company’s outstanding equity for a total US$35.9 billion in cash. Net proceeds from the offering will be combined with other financial sources and cash on hand to finance the acquisition.
Kellanova’s market cap is US$28.46 billion.
When issued, the notes will not be guaranteed by Mars’s subsidiaries. Once the acquisition is completed, Kellanova is expected to guarantee the notes on a senior unsecured basis.
Maturities of the notes range from 2027 to 2065, with coupons between 4.450% for the shortest to 5.8% for the longest durations.
If the acquisition is terminated or not completed by 20 August 2026, notes from this issuance will be subject to special mandatory redemption at 101% of the principal amount to be redeemed, plus interest.
In January, Mars’s credit rating was downgraded by S&P Global Ratings after the acquisition was announced, falling from A+ to A due to its increased debt leverage.
“We do not forecast the company will restore leverage to the low-3x area until at least fiscal 2026 and below 3x by fiscal 2027,” the ratings agency said.
However, the company recognised the business benefits of the acquisition and noted that Mars’s strong cash flow generation and historical deleveraging after large acquisitions prevent its rating from falling further.
The rating has a stable outlook, with S&P Global expecting leverage to fall below 3.5x and debt to remain around 10% by fiscal year 2026.
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