(Reuters) – Confectionery giant Mars said on Wednesday it was buying Kellanova (formerly Kellogg) for nearly $36 billion, the largest deal in the processed food sector.

Under the deal, Mars, which makes M&Ms and Snickers, will pay $83.50 per share for Kellanova, a premium of about 33 percent to its closing price on Aug. 2, before Reuters first reported that Mars was exploring a potential acquisition of Kellanova.

Kellanova shares rose about 8 percent to $80.45 in after-hours trading. Based on shareholder equity, the group is valued at $28.58 billion, according to a Reuters calculation.

The deal comes as sales growth at U.S. food companies including Kraft Heinz, Mondelez and Hershey has slowed due to inflation.

The acquisition dwarfs Mars’ $23 billion acquisition of Wrigley in 2008 and would bring together under one roof popular consumer brands including Mars’ Twix, Bounty and Milky Way chocolates, as well as Kellanova’s cookie portfolio of Pop-Tarts, Rice Krispies Treats and Eggo frozen waffles.

The acquisition is unlikely to face too many competitive hurdles because of the limited overlap between the two companies’ offerings, legal experts told Reuters.

Kellanova will become part of Chicago-based Mars Snacking, led by Andrew Clarke, after the deal closes in the first half of 2025, the companies said.

The group, which split from WK Kellogg last October, specialises in savoury snacks and sells cereals outside North America.

Kellanova recorded net sales of more than $13 billion in 2023.

The Wall Street Journal reported the terms of the deal on Tuesday.

(Writing by Mrinmay Dey and Aishwarya Venugopal in Bangalore, Anirban Sen in New York; Elena Smirnova, editing by Kate Entringer)

Copyright © 2024 Thomson Reuters