Kellanova may be worth $85/share in Mars takeout – analyst

Kellanova (NYSE:K) may be valued at about $85 a share in a potential takeover by Mars, according to a Jefferies analyst.

Kellanova shares shot up 16% on Monday after reports on Sunday that Mars was in talks to acquire the snack maker in a deal that could be valued at about $30 billion, based on a typical M&A premium. Kellanova has a market cap of $25 billion.

The $85 takeout price is based on a deal being done at 16x TTM EBITDA, Jefferies analyst Rob Dickerson wrote in a note on Monday. Dickerson raised his price target on Kellanova (K) to $76 from $62.

“We find Mars the most logical acquirer for several reasons,” Dickerson, who has a had rating, wrote in the note. “K’s takeout multiple could fall below precedent snacking M&A comps, however.”

The 10-year precedent deals comparable points to an 18x EV/EBITDA avg. acquisition multiple for U.S. snacking-only companies, according to Dickerson.

“Given its broader portfolio (with ongoing volume pressure in Europe), nonsnacking exposure such as cereal and noodles, we use 16x as a more rational transaction multiple,” Dickerson wrote.

On Monday, an RBC analyst said Kellanova (K) could see $108 a share in a potential deal.

Kellanova (K) could also see interest from Hershey (HSY), Mondelez (MDLZ) and Pepsi (PEP), CNBC’s David Faber said on Monday.

Jefferies’ Dickerson also sees General Mills (GIS) as another possible bidder for Kellanova (K) and GIS could divest brands such as Yoplait to help raise funds for a deal.