Conglomerates are breaking up and sharpening focus. Candymaker Mars is bucking the trend.
Conglomerates are breaking up and sharpening focus. Candymaker Mars is bucking the trend.
There’s consolidation afoot in the snack food aisle: Mars Inc. will be buying Kellanova — which makes Kellogg’s, Cheez-It and Pringle products — for around $36 billion. Mars started out as a candy company more than a century ago, but snack food is far from its only line of business.
Pop quiz: Who is the largest corporate owner of veterinary clinics in the U.S.? The answer is Mars. Yes, the same Mars that sells you bubble gum and Skittles could very well be vaccinating your puppy.
“In the U.S., they have several thousand clinics,” said Eric Lewandowski, a business advisor with SAX.
Mars runs clinics including VCA, BluePearl and Banfield Pet Hospital, he said. It also owns pet food brands. Among them: Pedigree, Whiskas and Royal Canin.
Mars even owns a software platform, PetExec, to help pet groomers and doggie daycares manage operations. The company claims to serve half of the world’s pets in some fashion or another.
“Mars wants to be part of every aspect of a pet’s life,” said Lewandowski.
OK, this story has strayed pretty far from Skittles. The point is, this kind of company — one with a bunch of seemingly disparate business lines — is called a conglomerate. And economy-wide, conglomerates aren’t exactly in vogue these days, according to Jarrad Harford, a finance professor at the University of Washington.
“The market has definitely been pushing companies toward focus,” he said.
Harford pointed out that a lot of conglomerates have been splitting apart, including GE, Dow Chemical, and Fortune Brands, which at one point made everything from golf balls to whiskey. The break-ups have generally been good for the prices of those companies’ publicly traded stocks.
But “Mars corporation is a privately held company,” noted Edward Rock, a professor of corporate law at NYU. “They’re a huge company, but they’re still family-owned. As they say on their website, they think in generations.”
Mars doesn’t have to please shareholders looking to make a quick buck by splitting a conglomerate into its constituent parts, Rock said.
“They’re immune. They’re immune to the particular fashions of public capital markets.”
And so, Rock added, Mars is free to diversify — rather than putting all of its candy eggs in one basket.
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