Mars Inc., the renowned confectionery and pet food company, is reportedly considering acquiring Kellanova ( K ) , the snack manufacturer behind popular brands like Cheez-It and Pringles.

What Happened: Mars Inc. is contemplating a potential acquisition of Kellanova ( K ). The latter, which also produces other well-known snacks, has a market value of approximately $27 billion, including debt, Reuters, reported citing people familiar with the matter.

The news has caused a significant surge in Kellanova’s stock, which is up by about 20% since its separation from WK Kellogg Co. last October. Despite this increase, the company’s shares are still trading at a discount compared to some of its competitors, making it an attractive acquisition target.

Kellanova ( K ) manufactures products in 21 countries and markets them in over 180 countries. Following its separation from WK Kellogg last year, Kellanova ( K ) retained a portfolio that includes snacks like Pop-Tarts and Rice Krispies Treats, frozen breakfast foods such as Morningstar Farms and Eggo, and an international cereal division.

It’s important to note that there is no certainty that Kellanova ( K ) will agree to a deal with Mars. Other potential suitors could also emerge, or there could be no deal at all, according to the report.

Kellanova ( K ) and Mars Inc. did not immediately respond to Benzinga's request for comment.

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Why It Matters: Mars’ potential acquisition of Kellanova ( K ) is significant in the context of the current state of the packaged food industry. Companies in this sector are increasingly seeking consolidation to mitigate the impact of factors such as price inflation and declining demand due to weight-loss drugs.

However, the recent trend in the industry has seen smaller deals, with U.S. antitrust regulators expressing concerns about these transactions leading to higher prices and fewer options for consumers.

On Thursday, Kellanova ( K ) reported strong second-quarter results, with adjusted EPS and sales surpassing expectations despite external challenges.

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This story was generated using Benzinga Neuro and edited by Kaustubh Bagalkote