SAN FRANCISCO (S&P Global Ratings) June 21, 2022–S&P Global Ratings today said Mondelez International Inc.‘s (BBB/Stable/A-2) acquisition of CLIF Bar & Co. would increase leverage modestly if funded entirely by incremental debt, but also enhance Mondelez’s snack bar platform and expand its products in the health and wellness segment, in line with its strategy.
Mondelez announced it is acquiring CLIF, a U.S. leader in the fast-growing energy bar market, for approximately $2.9 billion with earnouts, but did not disclose financing details. In April 2022, it announced it was acquiring Ricolino, a Mexico-based confectionery company from Grupo Bimbo for about $1.3 billion. Mondelez’s leverage for the 12 months ended March 31, 2022, was about 3.6x. The company will likely monetize some of its coffee investments (none of the value of which is netting against S&P Global Ratings-adjusted debt) to provide it with additional liquidity, which could mitigate the potential increase in its leverage if it uses the cash to partially fund the transaction.
If the company funded both acquisitions entirely with debt, we estimate leverage could rise to the low 4x-area, which is within the bounds of the current rating. In addition, Mondelez is preparing to divest its developed market gum and global Halls business, which could yield considerable proceeds to offset incremental debt used to fund the acquisitions in the interim. While larger than its recent acquisitions, we believe this transaction is consistent with Mondelez’s strategy to expand its snacking portfolio into fast-growing categories and geographies. The acquisition will add the CLIF, LUNA, and CLIF kid brands to Mondelez’s portfolio and expand its global snack bar business to more than $1 billion. The transaction is expected to close by third-quarter 2022, subject to customary regulatory review.
For the complete report on Mondelez, please see our full analysis published on March 18, 2022.
This report does not constitute a rating action.
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