Sugar is not so sweet anymore. Blamed for making people sick and causing obesity, consumers are turning to healthier options and governments are trying to curb sugar consumption. Faced with these market dynamics, Mars recently announced it has made a minority investment in Kind Snacks. Kind’s products are made without artificial ingredients and include bars, fruit snacks and grain clusters. Terms were not disclosed, but deal reportedly values Kind at $4 billion. The deal allows Mars, best known as the maker for M&Ms and snickers, to reduce its dependence on candy, a shrinking market, while expanding into healthy snacks, a growing market.
Minority Investment Allows Kind to Remain Independent
Interestingly, part of the reason Kind agreed to a deal with Mars was because the investment would allow Kind to remain private and led by founder Daniel Lubetzky. There are a variety of deal structures in addition to 100% acquisition including minority investment, joint ventures, strategic alliances, and majority investment. Being flexible on deal structure will open up more opportunities that allow you to reach an agreement with a seller while still accomplishing your strategic goals.
Although buyers may worry about control when acquiring less than 100% of a company, the truth is there are ways to structure the transaction to everybody gets what they want. In the case of Mars, the investment still gives the candy company access to a strong brand name and a foothold in the healthy snacks market.
Mars Acquires to Expand in High Growth Markets
This deal is not the first step Mars has taken to reduce its reliance on chocolate. The company also acquired VCA, a veterinary business earlier this year to grow its petcare business. While people are consuming fewer candy bars, they are spending more money on taking care of their pets. Through a series of acquisitions, Mars is shifting away from the candy market and expanding in the growing healthy snack division and petcare sector.
Faced with a shrinking market, often the best way to grow is to enter into a growing market. Successful companies are able to anticipate future demand and take steps to capture this demand. The best way to reposition your company is when you are in a strong position and have many growth options before you. Don’t wait until you are struggling to think about growth.
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