Mars, the closely held U.S. confectionery company, is considering buying snack maker Kellanova, according to people familiar with the matter, in what could be one of the biggest deals in the consumer industry this year.

Deal considerations are ongoing and no final decisions have been made, the people said, asking not to be identified because the matter is private.

An acquisition of Kellanova, which was spun off from Kellogg Co. last year, would give Mars brands such as Pringles, Cheez-It and Pop-Tarts and help the brands fight back against declining volumes and weaker consumer spending. With inflation subsiding, companies that raised prices during the pandemic are finding it harder to cover declining purchases with higher prices. 

Kellanova shares jumped 14% in early New York trading. They have gained 13% this year, valuing the company at $21.6 billion. That compares to a 12% increase in the S&P 500.

“At times like this when growth slows, balance sheets are relatively clean, and valuations dip, the market leaders in food tend to look more closely at big combinations to drive cost synergies,” TD Cowen analyst Robert Moskow wrote in a note Monday. 

Moskow said that Kellanova’s popular snacks should fit well with Mars’ brands and help them expand scale in international markets.  

Representatives for Mars and Kellanova didn’t immediately respond to requests seeking comment outside business hours.

Kellogg split its snacks business from its North American cereal operations, which includes brands like Special K and Corn Flakes, last year.

Mars counts brands including Snickers, M&M’S, Skittles, and Ben’s Original, as well as petcare brands such as Pedigree and Whiskas. Earlier this year, it acquired the premium chocolate brand Hotel Chocolat.

—Bloomberg News