UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

 

SCHEDULE 14A

Proxy Statement Pursuant to Section 14(a) of

the Securities Exchange Act of 1934

 

 

Filed by the Registrant ☒

Filed by a Party other than the Registrant ☐

Check the appropriate box:

 

☐	Preliminary Proxy Statement

 

☐	Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2))

 

☒	Definitive Proxy Statement

 

☐	Definitive Additional Materials

 

☐	Soliciting Material under §240.14a-12

KELLANOVA

(Exact name of registrant as Specified in its Charter)

N/A

(Name of Person(s) Filing Proxy Statement, if other than the Registrant)

 

☐	No fee required.

 

☒	Fee paid previously with preliminary materials.

 

☐	Fee computed on table in exhibit required by Item 25(b) per Exchange Act Rules 14a-6(i)(1) and 0-11.

 

 

 

KELLANOVA

412 N. Wells Street

Chicago, Illinois 60654

September 26, 2024

To Our Shareowners:

You are cordially invited to attend a special meeting of shareowners (the “Special Meeting”) of Kellanova (which we refer to as “Kellanova,” “the Company,” “we,” “us” or “our”) virtually, to be held at Noon Central Time, on November 1, 2024. The Special Meeting will be conducted via live webcast at www.virtualshareholdermeeting.com/K2024SM. For purposes of attendance at the Special Meeting, all references in the accompanying proxy statement to “present in person,” “in person” or “attend” will mean virtually present at or to attend virtually the Special Meeting.

On August 13, 2024, Kellanova entered into an Agreement and Plan of Merger (as it may be amended, supplemented or otherwise modified in accordance with its terms, the “Merger Agreement”) (a copy of which is attached as Annex A to the accompanying proxy statement) with Acquiror 10VB8, LLC, a Delaware limited liability company (“Acquiror”), Merger Sub 10VB8, LLC, a Delaware limited liability company and a wholly owned subsidiary of Acquiror (“Merger Sub”), and, solely for purposes of Section 6.2(b), Section 6.5, Section 6.18 and Section 9.15 of the Merger Agreement, Mars, Incorporated, a Delaware corporation (“Mars”). Upon the terms and subject to the conditions set forth in the Merger Agreement, Merger Sub will merge with and into Kellanova, with Kellanova surviving as a wholly owned subsidiary of Acquiror (the “Merger”). If the Merger is completed, the holders of the common stock, par value $0.25 per share, of Kellanova (the “Common Stock”), will receive $83.50 in cash, without interest and subject to any applicable withholding taxes, for each share of Common Stock that they own immediately prior to the time the Merger becomes effective (the “Effective Time”), other than shares owned (or held in treasury) by Kellanova, shares held, directly or indirectly, by Mars or any of its subsidiaries (including Acquiror and its subsidiaries) or any wholly owned subsidiary of Kellanova immediately prior to the Effective Time, or shares held by a holder or beneficial owner who properly demands appraisal of such shares pursuant to, and who complies in all respects with, Section 262 of the Delaware General Corporation Law. For more information, please see the section of the accompanying proxy statement entitled “The Merger Agreement.”

At the Special Meeting, you will be asked to consider and vote on:

 

•

a proposal to adopt and approve the Merger Agreement (the “Merger Proposal”);

 

•

a proposal to approve, on a non-binding, advisory basis, the compensation that may be paid or become payable to Kellanova’s named executive officers that is based on or otherwise relates to the Merger (the “Advisory Compensation Proposal”); and

 

•

a proposal to approve one or more adjournments of the Special Meeting, if necessary, to solicit additional proxies if a quorum is not present or there are not sufficient votes cast at the Special Meeting to approve the Merger Proposal (the “Adjournment Proposal”).

The Kellanova board of directors (the “Board”) carefully reviewed and considered the terms and conditions of the Merger Agreement and the transactions contemplated by the Merger Agreement, including the Merger. After due and careful discussion and consideration, the Board unanimously (i) determined that the terms of the Merger Agreement and the transactions contemplated thereby, including the Merger, are fair to, and in the

best interests of, Kellanova and Kellanova shareowners, (ii) determined that it is in the best interests of Kellanova and Kellanova shareowners, and declared it advisable, to enter into, and adopted, the Merger Agreement providing for the Merger, upon the terms and subject to the conditions set forth therein and in accordance with the applicable provisions of the Delaware General Corporation Law (“DGCL”), (iii) approved and authorized the execution and delivery of the Merger Agreement, the performance of Kellanova’s covenants and other obligations thereunder and the consummation of the Merger upon the terms and subject to the conditions set forth in the Merger Agreement, (iv) resolved to recommend that Kellanova shareowners vote in favor of the adoption of the Merger Agreement and the transactions contemplated thereby, including the Merger, in accordance with the DGCL and to include such recommendation in the accompanying proxy statement and (v) directed that the adoption of the Merger Agreement be submitted for consideration by Kellanova shareowners at a meeting thereof. Accordingly, the Board unanimously recommends that Kellanova shareowners vote “FOR” the Merger Proposal, “FOR” the Advisory Compensation Proposal and “FOR” the Adjournment Proposal.

Contemporaneously and in connection with the execution of the Merger Agreement, Acquiror entered into voting agreements (each, a “Voting Agreement”) with each of (1) W.K. Kellogg Foundation Trust, a Michigan charitable trust for the sole benefit of the W.K. Kellogg Foundation (the “Kellogg Foundation Trust”), (2) certain entities and trusts affiliated with G. Zachary Gund (collectively, the “G. Zachary Gund Entities”) and (3) KeyBank National Association solely in its capacity as trustee of certain trusts affiliated with the Gund family (collectively, the “Gund Trusts” and, each of the Kellogg Foundation Trust, the G. Zachary Gund Entities and the Gund Trusts, a “Voting Agreement Shareowner”) (copies of which are attached as Annexes B, C and D to the accompanying proxy statement, respectively), pursuant to which each Voting Agreement Shareowner agreed, upon the terms and subject to the conditions of its respective Voting Agreement, among other things, to vote all of the shares of Common Stock held by it in favor of the Merger Proposal at the Special Meeting. For more information, please see the section of the accompanying proxy statement entitled “The Voting Agreements.” For more information regarding the security ownership of the Kellogg Foundation Trust, G. Zachary Gund Entities and Gund Trusts, please see the section of the accompanying proxy statement entitled “Certain Beneficial Owners of Common Stock.”

The accompanying proxy statement provides you with more specific information about the Special Meeting, the Merger Agreement, the Merger and the other transactions contemplated by the Merger Agreement. You should carefully read the entire proxy statement, including the annexes and documents referred to or incorporated by reference therein. You may also obtain more information about Kellanova from the documents Kellanova files with the Securities and Exchange Commission (the “SEC”), including those incorporated by reference into the accompanying proxy statement.

Your vote is very important. If a quorum is present at the Special Meeting, approval of the Merger Proposal requires the affirmative vote of the holders of a majority of the outstanding shares of Common Stock entitled to vote thereon. The failure of any Kellanova shareowner to vote will have the same effect as a vote against the Merger Agreement. If a quorum is present at the Special Meeting, approval of the Adjournment Proposal and the Advisory Compensation Proposal requires the affirmative vote of the holders of a majority of the Common Stock entitled to vote thereon and present in person or represented by proxy at the Special Meeting. Properly executed proxy cards with no instructions indicated on the proxy card will be voted “FOR” the Merger Proposal, “FOR” the Advisory Compensation Proposal and “FOR” the Adjournment Proposal. Even if you plan to attend the Special Meeting virtually, Kellanova requests that you complete, sign, date and return the enclosed proxy card in the accompanying envelope prior to the Special Meeting to ensure that your shares will be represented and voted at the Special Meeting if you later decide not to or become unable to attend virtually.

You may also submit a proxy over the Internet using the Internet address on the enclosed proxy card or by telephone using the toll-free number on the enclosed proxy card. If you submit your proxy through the Internet or by telephone, you will be asked to provide the control number from the enclosed proxy card. If you are not a shareowner of record, but instead hold your shares in “street name” through a broker, bank, trust or other nominee, you must provide a proxy executed in your favor from your broker, bank, trust or other nominee in order to be able to vote at the Special Meeting.

Please vote as promptly as possible, regardless of whether or not you plan to attend the Special Meeting virtually. If your shares are held in the name of a broker, bank, trust or other nominee, please vote by following the instructions on the voting instruction form furnished by the broker, bank, trust or other nominee. If you hold your shares in your own name, submit a proxy to vote your shares as promptly as possible by (i) visiting the Internet site listed on the proxy card, (ii) calling the toll-free number listed on the proxy card or (iii) submitting your proxy card by mail by using the self-addressed, stamped envelope provided. Submitting a proxy will not prevent you from voting virtually at the Special Meeting, but it will help to secure a quorum and avoid added solicitation costs. Any eligible holder of Common Stock entitled to vote at the Special Meeting and who is virtually present at the Special Meeting may vote, thereby revoking any previous proxy of such shareowner. In addition, a proxy may also be revoked in writing before the Special Meeting in the manner described in the accompanying proxy statement.

If you have any questions concerning the Merger Proposal, the Advisory Compensation Proposal, the Adjournment Proposal, the Merger or the accompanying proxy statement, would like additional copies of these materials or need help voting your shares of Common Stock, please contact:

D.F. King & Co., Inc.

48 Wall Street, 22nd Floor

New York, NY 10005

Toll-Free: (800) 791-3319

Email: K@dfking.com

Thank you for your cooperation and continued support.

Sincerely,

 

 

Steve Cahillane

Chairman, President and Chief Executive Officer

The Merger has not been approved or disapproved by the SEC or any state securities commission. Neither the SEC nor any state securities commission has passed upon the merits or fairness of the Merger or upon the adequacy or accuracy of the information contained in this document or the accompanying proxy statement. Any representation to the contrary is a criminal offense.

THIS PROXY STATEMENT IS DATED SEPTEMBER 26, 2024 AND IS FIRST BEING MAILED TO SHAREOWNERS OF KELLANOVA ON OR ABOUT SEPTEMBER 26, 2024.

 

KELLANOVA

412 N. Wells Street

Chicago, Illinois 60654

NOTICE OF SPECIAL MEETING OF SHAREOWNERS

TO BE HELD NOVEMBER 1, 2024

To Our Shareowners:

A special meeting of shareowners (the “Special Meeting”) of Kellanova, a Delaware corporation (which we refer to as “Kellanova,” “the Company,” “we,” “us” or “our”), will be held virtually at Noon Central Time, on November 1, 2024. The Special Meeting will be conducted virtually via live webcast at www.virtualshareholdermeeting.com/K2024SM for the following purposes:

1  Adoption and Approval of the Merger Agreement. To vote on a proposal to adopt and approve the Agreement and Plan of Merger, dated as of August 13, 2024 (as it may be amended, supplemented or otherwise modified in accordance with its terms, the “Merger Agreement”) by and among Kellanova, Acquiror 10VB8, LLC, a Delaware limited liability company (“Acquiror”), Merger Sub 10VB8, LLC, a Delaware limited liability company and a wholly owned subsidiary of Acquiror (“Merger Sub”), and, solely for purposes of Section 6.2(b), Section 6.5, Section 6.18 and Section 9.15 of the Merger Agreement, Mars, Incorporated, a Delaware corporation, pursuant to which, upon the terms and subject to the conditions set forth in the Merger Agreement, Merger Sub will merge with and into Kellanova, with Kellanova surviving as a wholly owned subsidiary of Acquiror (such merger, the “Merger” and such proposal, the “Merger Proposal”);

2  Advisory Compensation Proposal. To vote on a proposal to approve, on a non-binding advisory basis, the compensation that may be paid or become payable to Kellanova’s named executive officers that is based on or otherwise relates to the Merger (the “Advisory Compensation Proposal”); and

3  Adjournment Proposal. To vote on a proposal to approve one or more adjournments of the Special Meeting, if necessary, to solicit additional proxies if a quorum is not present or there are not sufficient votes cast at the Special Meeting to approve the Merger Proposal (the “Adjournment Proposal”).

The Kellanova board of directors (the “Board”), at a meeting duly called and held, has by unanimous vote (i) determined that the terms of the Merger Agreement and the transactions contemplated thereby, including the Merger, are fair to, and in the best interests of, Kellanova and the holders of the outstanding shares of Kellanova’s common stock, par value $0.25 per share (the “Common Stock” and such holders, the “Kellanova shareowners”); (ii) determined that it is in the best interests of Kellanova and Kellanova shareowners, and declared it advisable, to enter into, and adopted, the Merger Agreement providing for the Merger, upon the terms and subject to the conditions set forth therein and in accordance with the applicable provisions of the DGCL (as defined below); (iii) approved and authorized the execution and delivery of the Merger Agreement, the performance of Kellanova’s covenants and other obligations thereunder and the consummation of the Merger upon the terms and subject to the conditions set forth in the Merger Agreement; (iv) resolved to recommend that Kellanova shareowners vote in favor of the adoption of the Merger Agreement in accordance with the DGCL and to include such recommendation in this proxy statement; and (v) directed that the adoption of the Merger Agreement and the transactions contemplated thereby, including the Merger, be submitted for consideration by Kellanova shareowners at a meeting thereof. Accordingly, the Board unanimously recommends that Kellanova shareowners vote “FOR” the Merger Proposal, “FOR” the Advisory Compensation Proposal and “FOR” the Adjournment Proposal.

Kellanova will transact no other business at the Special Meeting or any adjournment or postponement thereof, except such business as may properly be brought before the Special Meeting or any adjournment or postponement thereof by or at the direction of the Board. This proxy statement, of which this notice is a part, describes the proposals listed above in more detail. Please refer to the attached documents, including the Merger Agreement and all other annexes and any documents incorporated by reference, for further information with respect to the business to be transacted at the Special Meeting. You are encouraged to read the entire document carefully before voting. In particular, please see the section entitled “The Merger Agreement” beginning on page 83 of this proxy statement for a description of the transactions contemplated by the Merger Agreement.

To participate in the Special Meeting, visit www.virtualshareholdermeeting.com/K2024SM and enter the 16-digit control number on the proxy card, voting instruction form or notice you received. For purposes of attendance at the Special Meeting, all references in the proxy statement to “present in person,” “in person” or “attend” will mean virtually present at or to attend virtually the Special Meeting. If a quorum is present at the Special Meeting, approval of the Merger Proposal by the affirmative vote of the holders of a majority of the outstanding shares of Common Stock entitled to vote thereon is required to complete the Merger. The failure to vote will have the same effect as a vote against the Merger Proposal. Kellanova shareowners will also be asked to approve the Advisory Compensation Proposal and the Adjournment Proposal. If a quorum is present at the Special Meeting, approvals of the Adjournment Proposal and the Advisory Compensation Proposal (which are not conditions to the consummation of the Merger) each requires the affirmative vote of the holders of a majority of the Common Stock entitled to vote thereon and present in person or represented by proxy at the Special Meeting.

A shareowner who does not vote in favor of the Merger Proposal will have the right to seek appraisal of the fair value of its shares if the Merger is completed, but only if such shareowner submits a written demand for appraisal to Kellanova prior to the time the vote is taken on the Merger Proposal and strictly complies with the procedures set forth in Section 262 of the Delaware General Corporation Law (“DGCL”). A copy of the applicable DGCL statutory provisions may be accessed without subscription or cost at the following publicly available website: https://delcode.delaware.gov/title8/c001/sc09/index.html#262, and a summary of these provisions can be found under the section entitled “Appraisal Rights” beginning on page 116 of this proxy statement.

The Board has fixed the close of business on September 24, 2024 as the record date (the “Record Date”) for the determination of the Kellanova shareowners entitled to receive notice of, and to virtually vote at, the Special Meeting or any adjournment or postponement thereof. The Kellanova shareowners of record as of the close of business on the Record Date are the only Kellanova shareowners that are entitled to receive notice of, and to virtually vote at, the Special Meeting and any adjournment or postponement thereof unless a new record date is fixed in connection with any adjournment or postponement of the Special Meeting. Regardless of whether there is a quorum, the presiding chairman may adjourn the Special Meeting. For additional information regarding the Special Meeting, please see the section entitled “The Special Meeting of Kellanova’s Shareowners” beginning on page 31 of this proxy statement.

To ensure your shares are represented and voted at the Special Meeting, please vote as promptly as possible, regardless of whether or not you plan to attend the Special Meeting virtually. If your shares are held in the name of a broker, bank, trust or other nominee, please vote by following the instructions on the voting instruction form furnished by the broker, bank, trust or other nominee. If you hold your shares in your own name, please submit a proxy to vote your shares as promptly as possible by (i) visiting the Internet site listed on the proxy card, (ii) calling the toll-free number listed on the proxy card or (iii) submitting your proxy card by mail by using the self-addressed, stamped envelope provided. Submitting a proxy will not prevent you from voting virtually at the Special Meeting, but it will help to secure a quorum and avoid added solicitation costs. Any eligible holder of Common Stock entitled to vote at the Special Meeting and who is virtually present at the Special Meeting may vote, thereby revoking any previous proxy of such shareowner. In addition, a proxy may also be revoked in writing before the Special Meeting in the manner described in this proxy statement.

A list of the names of shareowners entitled to vote at the Special Meeting will be available for a period of at least ten days prior to the Special Meeting. To arrange review of the list of shareowners for any purpose relevant to the Special Meeting, please contact Investor Relations at (269) 961-2800. The shareowner list will also be available during the virtual Special Meeting for examination by shareowners at www.virtualshareholdermeeting.com/K2024SM.

If you have any questions or need assistance voting your shares, please contact:

D.F. King & Co., Inc.

48 Wall Street, 22nd Floor

New York, NY 10005

Toll-Free: (800) 791-3319

Email: K@dfking.com

By Request of the Chair of the Board,

 

 

Todd Haigh

Senior Vice President, Chief Legal Officer and Secretary

Chicago, Illinois

September 26, 2024

YOUR VOTE IS IMPORTANT

WHETHER OR NOT YOU PLAN TO ATTEND THE SPECIAL MEETING VIRTUALLY, WE ENCOURAGE YOU TO SUBMIT YOUR PROXY OR VOTING INSTRUCTIONS AS PROMPTLY AS POSSIBLE BY (i) TELEPHONE USING THE TOLL-FREE NUMBER ON YOUR PROXY CARD, (ii) VISITING THE INTERNET SITE LISTED ON THE PROXY CARD OR (iii) SUBMITTING YOUR PROXY OR VOTING INSTRUCTION CARD BY MAIL BY USING THE SELF-ADDRESSED, STAMPED ENVELOPE PROVIDED. YOU MAY REVOKE YOUR PROXY OR CHANGE YOUR VOTING INSTRUCTIONS AT ANY TIME BEFORE IT IS VOTED AT THE SPECIAL MEETING.

Properly executed proxy cards with no instructions indicated on the proxy card will be voted “FOR” the Merger Proposal, “FOR” the Advisory Compensation Proposal and “FOR” the Adjournment Proposal. Even if you plan to attend the Special Meeting virtually, Kellanova requests that you complete, sign, date and return the enclosed proxy card in the accompanying envelope prior to the Special Meeting to ensure that your shares will be represented and voted at the Special Meeting if you later decide not to or become unable to attend virtually.

You may also submit a proxy over the Internet using the Internet address on the enclosed proxy card or by telephone using the toll-free number on the enclosed proxy card. If you submit your proxy through the Internet or by telephone, you will be asked to provide the control number from the enclosed proxy card. If you are not a shareowner of record, but instead hold your shares in “street name” through a broker, bank, trust or other nominee, you must provide a proxy executed in your favor from your broker, bank, trust or other nominee in order to be able to vote at the Special Meeting.

Please vote as promptly as possible, regardless of whether or not you plan to attend the Special Meeting virtually. If your shares are held in the name of a broker, bank, trust or other nominee, please vote by following the instructions on the voting instruction form furnished by the broker, bank, trust, or other nominee. If you hold your shares in your own name, please submit a proxy to vote your shares as promptly as possible by (i) visiting the Internet site listed on the proxy card, (ii) calling the toll-free number listed on the proxy card, or (iii) submitting your proxy card by mail by using the self-addressed, stamped envelope provided. Submitting a proxy will not prevent you from voting virtually at the Special Meeting, but it will help to secure a quorum and avoid added solicitation costs. Any eligible holder of Common Stock entitled to vote at the Special Meeting who is virtually present at the Special Meeting may vote, thereby revoking any previous proxy of such shareowner. In addition, a proxy may also be revoked in writing before the Special Meeting in the manner described in this proxy statement.

This proxy statement provides a detailed description of the Merger, the Merger Agreement and the other matters to be considered at the Special Meeting. We urge you to carefully read this proxy statement, including any documents incorporated by reference, and the annexes in their entirety. If you have any questions concerning the Merger Proposal, the Advisory Compensation Proposal, the Adjournment Proposal, the Merger or this proxy statement, would like additional copies of these materials or need help voting your shares of Common Stock, please contact:

D.F. King & Co., Inc.

48 Wall Street, 22nd Floor

New York, NY 10005

Toll-Free: (800) 791-3319

Email: K@dfking.com

TABLE OF CONTENTS

 

SUMMARY			1
QUESTIONS AND ANSWERS ABOUT THE SPECIAL MEETING AND THE MERGER			16
CAUTIONARY STATEMENT CONCERNING FORWARD-LOOKING INFORMATION			28
THE PARTIES TO THE MERGER			30
Kellanova			30
Mars, Incorporated			30
Acquiror 10VB8, LLC			30
Merger Sub 10VB8, LLC			30
THE SPECIAL MEETING OF KELLANOVA’S SHAREOWNERS			31
General			31
Date, Time and Place			31
Purpose of the Special Meeting			31
Recommendation of the Board			31
Record Date; Shareowners Entitled to Vote			32
Quorum; Adjournment			32
Required Vote			33
Abstentions and Broker Non-Votes			33
Failure to Vote			34
Voting by Kellanova’s Directors and Executive Officers			34
Voting at the Special Meeting			35
Revocation of Proxies			35
Solicitation of Proxies			36
Tabulation of Votes			36
Householding of Special Meeting Materials			36
Questions			36
Assistance			36
THE MERGER (PROPOSAL 1)			37
Background of the Merger			37
Recommendation of the Board and Its Reasons for the Merger			46
Certain Unaudited Forecasted Financial Information			51
Opinions of Financial Advisors to Kellanova			54
Financing of the Merger			69
Certain Effects of the Merger			70
Effects on Kellanova if the Merger Is Not Completed			71
Interests of Kellanova’s Directors and Executive Officers in the Merger			71
Agreements with Acquiror Following the Merger			75
Summary of Potential Transaction Payments to Named Executive Officers			75
Indemnification, Exculpation and Insurance			77
U.S. Federal Income Tax Considerations			78
Litigation Related to the Merger			80
Regulatory Approvals			81
Required Vote of Shareowners			81
THE MERGER AGREEMENT			83
Explanatory Note Regarding the Merger Agreement			83

 

i

Structure of the Merger; Certificate of Incorporation, Bylaws and Directors and Officers of the Surviving Corporation			83
When the Merger Becomes Effective; Closing and Effective Time			84
Effect of the Merger on the Common Stock			84
Withholding Rights			85
Treatment of Kellanova Incentive Awards			85
Payment for Common Stock in the Merger			86
Representations and Warranties			87
Conduct of Business Pending the Merger			89
Other Covenants and Agreements			92
Conditions to Consummation of the Merger			101
Termination			103
Termination Fee			104
Reverse Termination Fee			105
Expenses			105
Specific Performance; Remedies			105
Amendment; Waiver			106
Governing Law and Jurisdiction			106
Guarantee			106
THE VOTING AGREEMENTS			107
CERTAIN BENEFICIAL OWNERS OF COMMON STOCK			109
Five Percent Holders			109
Officer and Director Stock Ownership			110
THE ADVISORY COMPENSATION PROPOSAL (PROPOSAL 2)			113
Required Vote of Shareowners			113
ADJOURNMENT PROPOSAL (PROPOSAL 3)			114
Required Vote of Shareowners			114
OTHER MATTERS			115
APPRAISAL RIGHTS			116
DEADLINE FOR RECEIPT OF SHAREOWNER PROPOSALS FOR FUTURE ANNUAL MEETING			121
WHERE YOU CAN FIND MORE INFORMATION			122
ANNEX A – Merger Agreement
ANNEX B – Voting Agreement of W.K. Kellogg Foundation Trust
ANNEX C – Voting Agreement of the G. Zachary Gund Entities
ANNEX D – Voting Agreement of the Gund Trusts
ANNEX E – Opinion of Goldman Sachs & Co. LLC
ANNEX F – Opinion of Lazard Frères & Co. LLC

 

ii

 

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15

QUESTIONS AND ANSWERS ABOUT THE SPECIAL MEETING AND THE MERGER

The following questions and answers briefly address some commonly asked questions about the Special Meeting and the Merger. They may not include all the information that is important to Kellanova shareowners. Kellanova shareowners should carefully read this entire proxy statement, including the annexes and the other documents referred to herein and incorporated by reference.

 

Q:	Why am I receiving this proxy statement?

 

A:

You are receiving this proxy statement because Kellanova has agreed to be acquired pursuant to an all-cash merger transaction. Pursuant to the Merger Agreement, at the Effective Time, Merger Sub will merge with and into Kellanova, the separate corporate existence of Merger Sub will cease and Kellanova will continue as the Surviving Corporation as a wholly owned subsidiary of Acquiror. The Merger Agreement governs the terms of the Merger of Merger Sub and Kellanova and is attached to this proxy statement as Annex A. You are receiving this proxy statement in connection with the solicitation of proxies by the Board in favor of the Merger Proposal and the other matters to be voted on at the Special Meeting.

In order to complete the Merger, among other things, Kellanova shareowners must adopt the Merger Agreement in accordance with the DGCL. This proxy statement, which you should carefully read in its entirety together with any documents incorporated by reference and the annexes, contains important information about the Special Meeting, the Merger and other matters.

 

Q:	What will happen in the Merger?

 

A:

The Merger Agreement sets forth the terms and conditions of the proposed Merger. Under the Merger Agreement, Merger Sub will merge with and into Kellanova, the separate corporate existence of Merger Sub will cease and Kellanova will continue as the Surviving Corporation and a wholly owned subsidiary of Acquiror. The Merger Agreement is attached to this proxy statement as Annex A. For a more complete discussion of the proposed Merger, its effects and the other transactions contemplated by the Merger Agreement, please see the section entitled “The Merger.”

 

Q:	What are Kellanova shareowners being asked to vote on?

 

A:

Kellanova is holding the Special Meeting to vote on the Merger Proposal, pursuant to which each outstanding share of Common Stock will be cancelled and converted into the right to receive the Merger Consideration, other than shares owned (or held in treasury) by Kellanova as treasury stock, shares held, directly or indirectly, by Mars or any of its subsidiaries (including Acquiror and its subsidiaries) or any wholly owned subsidiary of Kellanova, immediately prior to the Effective Time, or shares held or beneficially owned by a holder or beneficial owner that properly perfects its appraisal rights under the DGCL. Kellanova shareowners will also be asked to approve the Advisory Compensation Proposal (on a non-binding, advisory basis) and the Adjournment Proposal.

Your vote is very important, regardless of the number of shares of Common Stock that you own. The approval of the Merger Proposal is a condition to the obligations of Mars and Kellanova to complete the Merger.

 

Q:	How important is my vote as a Kellanova shareowner?

 

A:	Your vote “FOR” each proposal presented at the Special Meeting is very important, and you are encouraged to submit a proxy as soon as possible. The Merger cannot be completed without the approval of the Merger Proposal by the Kellanova shareowners.

 

16

Q:	What constitutes a quorum, and what vote is required to approve each proposal at the Special Meeting?

 

A:

The holders of a majority of the outstanding shares of Common Stock as of the Record Date must be represented at the Special Meeting in person or by proxy in order to constitute a quorum. Virtual attendance by shareowners of record at the Special Meeting will constitute presence in person for the purpose of determining the presence of a quorum for the transaction of business at the Special Meeting. The inspector of election appointed for the Special Meeting will determine whether a quorum is present. The inspector of election will treat abstentions as present for purposes of determining the presence of a quorum.

Broker non-votes are shares held by a broker, bank, trust or other nominee that are present in person or represented by proxy and entitled to vote at the Special Meeting, but with respect to which the broker, bank, trust or other nominee is not instructed by the beneficial owner of such shares on how to vote on a particular proposal and such broker, bank, trust or nominee does not have discretionary voting power on such proposal. Because brokers, banks, trusts and other nominee holders of record do not have discretionary voting authority with respect to any of the three proposals to be presented at the Special Meeting, if a beneficial owner of shares of Common Stock held in “street name” does not give voting instructions to the broker, bank, trust or other nominee with respect to any of the proposals, then those shares will not be present in person or represented by proxy and entitled to vote at the Special Meeting.

If you provide voting instructions to your broker, bank, trust or other nominee on one or more of the proposals but not on one or more of the other proposals, then your shares will not be treated as present or entitled to vote for the purposes of determining a quorum on any proposal for which you fail to provide instructions, and will not be voted on any such proposal, but will be treated as present and entitled to vote for the purposes of determining a quorum, and will be voted on any proposal for which you provide instructions. To make sure that your shares are voted with respect to each of the proposals, you should instruct your bank, broker, trust or other nominee how you wish to vote your shares in accordance with the procedures provided by your bank, broker, trust or other nominee regarding the voting of your shares.

If a quorum is present, approval of the Merger Proposal requires the affirmative vote of holders of a majority of the outstanding shares of Common Stock as of the Record Date entitled to vote thereon. Accordingly, a Kellanova shareowner’s abstention from voting or the failure of a Kellanova shareowner to vote (including the failure of a Kellanova shareowner who holds shares in “street name” through a bank, broker, trust or other nominee to give any voting instructions to that bank, broker, trust or other nominee) will have the same effect as a vote “AGAINST” the Merger Proposal.

If a quorum is present, approval of each of the Adjournment Proposal and the Advisory Compensation Proposal requires the affirmative vote of the holders of a majority of the Common Stock as of the Record Date entitled to vote thereon and present in person or represented by proxy at the Special Meeting. Accordingly, with respect to a Kellanova shareowner who is present in person or represented by proxy at the Special Meeting, such shareowner’s abstention from voting on either the Advisory Compensation Proposal or the Adjournment Proposal will have the same effect as a vote “AGAINST” the Advisory Compensation Proposal or the Adjournment Proposal. Regardless of whether there is a quorum, the presiding chairman may adjourn the Special Meeting.

As of the close of business on the Record Date, there were 344,684,757 shares of Common Stock issued and outstanding.

 

Q:	How can I attend the Special Meeting?

 

A:

Kellanova shareowners as of the Record Date may attend, vote and submit questions virtually at the Special Meeting (or any adjournment or postponement thereof) by logging in at www.virtualshareholdermeeting.com/K2024SM. To log in, Kellanova shareowners (or their authorized representatives) will need the control number provided on their proxy card, voting instruction form or

 

17

notice. If you are not a Kellanova shareowner or do not have a control number, you may still access the meeting as a guest, but you will not be able to participate.

 

Q:	Are there any Kellanova shareowners who have already committed to voting in favor of any of the proposals at the Special Meeting?

 

A:

Yes. Contemporaneously and in connection with the execution of the Merger Agreement, Acquiror entered into the Voting Agreements with the Voting Agreement Shareowners, pursuant to which each Voting Agreement Shareowner agreed, among other things, subject to the terms and conditions of its respective Voting Agreement, to vote all of the shares of Common Stock held by it in favor of the Merger Proposal at the Special Meeting. For more information, please see the section entitled “The Voting Agreements.” For more information regarding the security ownership of the Kellogg Foundation Trust, G. Zachary Gund Entities and Gund Trusts, please see the section entitled “Certain Beneficial Owners of Common Stock.”

 

Q:	What will Kellanova shareowners receive if the Merger is completed?

 

A:

If the Merger is completed, shares of Common Stock outstanding at the Effective Time will automatically be cancelled and converted into right to receive the Merger Consideration of $83.50 per share in cash without interest and subject to any applicable withholding taxes, unless the holder or beneficial owner of such shares properly perfects its appraisal rights under the DGCL. Notwithstanding the foregoing, any shares of Common Stock held by Kellanova as treasury stock immediately prior to the Effective Time will automatically be cancelled and retired and not be entitled to receive the Merger Consideration, and any shares of Common Stock held by Mars or any of its subsidiaries (including Acquiror and its subsidiaries), or any wholly owned subsidiary of Kellanova, immediately prior to the Effective Time will remain outstanding and will not be converted into the right to receive the Merger Consideration. You will not be entitled to receive shares in the Surviving Corporation, Acquiror or Mars.

For more information regarding the Merger Consideration to be received by Kellanova shareowners if the Merger is completed, please see the section entitled “The Merger Agreement—Effect of the Merger on the Common Stock” beginning on page 84.

 

Q:	What will happen to the Company Options, Company Restricted Stock Units, Company Performance Stock Units and Company Deferred Stock Units that I hold?

 

A:	Treatment of Options

At the Effective Time, each Option that is outstanding and unexercised as of immediately prior to the Effective Time, by virtue of the Merger, will cease to be outstanding and will be converted into the right to receive an amount in cash, without interest, equal to the product of the total number of shares of Common Stock subject to such Option and the excess, if any, of the per share Merger Consideration over the exercise price per share of Common Stock underlying the Option, subject to tax withholding. Any Option with a per share exercise price equal to or greater than the per share Merger Consideration will be canceled as of the Effective Time without payment. All Options are currently fully vested. For more information, see the section entitled “The Merger Agreement—Treatment of Kellanova Incentive Awards—Treatment of Options.”

Treatment of RSUs

At the Effective Time, each RSU that was granted prior to the date of the Merger Agreement and that is outstanding immediately prior to the Effective Time (including any restricted stock unit granted in 2022 that was originally subject to vesting based on service and performance goals), by virtue of the Merger, will be deemed fully vested as to the number of shares of Common Stock issuable pursuant to such RSU, will cease to be outstanding and will be converted into the right to receive an amount in cash, without interest, equal to the sum of the product of such number of shares of Common Stock issuable pursuant to

 

18

the RSU and the per share Merger Consideration, plus all dividend equivalents accrued or credited with respect to such RSU, subject to tax withholding. Each RSU granted on or after the date of the Merger Agreement that is outstanding and unvested immediately prior to the Effective Time will automatically be cancelled and converted into a Converted RSU Cash Award equal to the per share Merger Consideration with respect to such RSU, plus all dividend equivalents accrued or credited with respect to such RSU. Each Converted RSU Cash Award will generally be subject to the same terms and conditions as applied to such RSU immediately prior to the Effective Time and will become payable in accordance with the original vesting schedule applicable to the corresponding RSU or, if earlier, upon a qualifying termination of employment. For more information, see the section entitled “The Merger Agreement—Treatment of Kellanova Incentive Awards—Treatment of RSUs.”

Treatment of PSUs

At the Effective Time, each PSU that is outstanding immediately prior to the Effective Time, by virtue of the Merger, will be deemed fully vested as to the number of shares of Common Stock (i) if the performance period applicable to such PSU ends prior to the Effective Time, issuable pursuant to such PSU assuming maximum level of performance, and (ii) if the performance period applicable to such PSU does not end prior to the Effective Time, issuable pursuant to such PSU at the greater of target or actual level of performance, as determined by Kellanova in good faith. All PSUs will cease to be outstanding and will be converted into the right to receive an amount in cash, without interest, equal to the sum of the product of such number of shares of Common Stock issuable pursuant to the PSU (based on the level of vesting as described above) and the per share Merger Consideration, plus all dividend equivalents accrued or credited with respect to such PSU, subject to tax withholding. Holders of PSUs that do not pay out in full at maximum level of performance at the Effective Time will also be entitled to a cash retention payment based on the difference between the value of their PSUs at maximum level of performance and the payment received by such holder at the Effective Time, which will be payable on the last day of the performance period applicable to the corresponding PSU, subject to the holder’s continued employment through such date or, if earlier, upon a qualifying termination of employment. For more information, see the section entitled “The Merger Agreement—Treatment of Kellanova Incentive Awards—Treatment of PSUs.”

Treatment of DSUs

At the Effective Time, each DSU that is outstanding immediately prior to the Effective Time, by virtue of the Merger, will cease to be outstanding and will be converted into the right to receive, at the time specified in the applicable company benefit plan and in accordance with Section 409A of the Code, an amount in cash, without interest, equal to the sum of the product of such number of shares of Common Stock underlying the DSU and the per share Merger Consideration, plus all dividend equivalents accrued or credited with respect to such DSU, subject to tax withholding. For more information, see the section entitled “The Merger Agreement—Treatment of Kellanova Incentive Awards—Treatment of DSUs.”

 

Q:	Will I be able to continue participating in the ESPP?

 

A:

Prior to the Effective Time, Kellanova may, in its discretion, amend the ESPP to freeze all participant payroll deduction elections in effect as of the date of the Merger Agreement under the ESPP, and is required to take all actions necessary to (i) provide that, contingent on the Effective Time: (1) no new purchasing period under the ESPP will commence following the date of the Merger Agreement; (2) there will be no increase in the amount of participants’ payroll deduction elections under the ESPP and no contributions other than previously elected payroll deductions during the current offering period from those in effect as of the date of the Merger Agreement; (3) no individual will commence participation in the ESPP during the period from the date of the Merger Agreement through the Effective Time; (4) each purchase right issued pursuant to the ESPP will be fully exercised on the earlier of the scheduled purchase

 

19

date for such purchasing period and the date that is immediately prior to the Effective Time, (ii) notify each participant that the purchase date for his or her purchase right issued pursuant to the ESPP has been changed and (iii) terminate the ESPP effective as of immediately prior to the Effective Time. For more information, see the section entitles “The Merger Agreement—Treatment of Kellanova Incentive Awards—Treatment of Employee Stock Purchase Plan.”

 

Q:	How does the Board recommend that I vote at the Special Meeting?

 

A:

The Board unanimously recommends that you vote “FOR” the Merger Proposal, “FOR” the Advisory Compensation Proposal and “FOR” the Adjournment Proposal. For additional information regarding the recommendation of the Board, please see the section entitled “The Merger—Recommendation of the Board and Its Reasons for the Merger.”

 

Q:	Who is entitled to vote at the Special Meeting?

 

A:

All holders of shares of Common Stock who held shares at the close of business on the Record Date are entitled to receive notice of, and to vote at, the Special Meeting or any adjournment or postponement thereof. Each such holder of Common Stock is entitled to cast one vote on each matter properly brought before the Special Meeting or any adjournment or postponement thereof for each share of Common Stock that such holder owned of record as of the close of business on the Record Date. Please see the section entitled “The Special Meeting of Kellanova’s Shareowners—Voting at the Special Meeting” for instructions on how to vote your shares without attending the Special Meeting.

 

Q:	What is a proxy?

 

A:	A shareowner’s legal designation of another person to vote shares of such shareowner’s common stock at a special or annual meeting is referred to as a proxy. The document used to designate a proxy to vote your shares of common stock is called a proxy card.

 

Q:	How many votes do I have for the Special Meeting?

 

A:

Each Kellanova shareowner is entitled to one vote for each share of Common Stock held of record as of the close of business on the Record Date for each matter properly brought before the Special Meeting or any adjournment or postponement thereof. As of the close of business on the Record Date, there were 344,684,757 outstanding shares of Common Stock.

 

Q:	What happens if the Merger is not completed?

 

A:

If the requisite Kellanova shareowners do not approve the Merger Proposal or if the Merger is not completed for any other reason, Kellanova shareowners will not receive any Merger Consideration or other payment for their shares of Common Stock in connection with the Merger. Instead, Kellanova expects that its management will operate Kellanova’s business in a manner similar to that in which it is being operated today and Kellanova will remain an independent public company, the Common Stock will continue to be listed and traded on the NYSE, the Common Stock will continue to be registered under the Exchange Act and Kellanova shareowners will continue to own their shares of Common Stock and will continue to be subject to the same general risks and opportunities as they currently are with respect to ownership of Common Stock. Under certain circumstances, if the Merger is not completed, Kellanova may be obligated to pay to Acquiror the Termination Fee. Please see the section of entitled “The Merger Agreement—Termination Fee.”

 

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Q:	What conditions must be satisfied to complete the Merger?

 

A:

In addition to the approval of the Merger Proposal, the Merger is subject to the satisfaction or waiver of various other conditions, including (i) the absence of a Legal Restraint, (ii) the expiration or termination of the applicable waiting period under the HSR Act, and receipt of all other clearances or approvals under other specified antitrust, competition, trade regulation and foreign investment laws, (iii) the accuracy of the representations and warranties contained in the Merger Agreement (subject to certain materiality and material adverse effect qualifications) and compliance with the covenants and agreements in the Merger Agreement in all material respects by the parties to the Merger Agreement, (iv) in the case of Acquiror and Merger Sub, the absence of a material adverse effect relating to Kellanova that is continuing and (v) in the case of Acquiror and Merger Sub, receipt of the Closing Tax Opinion (as defined and discussed further in the section entitled “The Merger Agreement—Other Covenants and Agreements—Tax Matters” beginning on page 99) from Acquiror Tax Counsel (as defined in the section entitled “The Merger Agreement—Conditions to Consummation of the Merger” beginning on page 101), provided that receipt of the Closing Tax Opinion from Acquiror Tax Counsel is not a condition to the consummation of the Merger to the extent that Acquiror Tax Counsel determines that it cannot render the Closing Tax Opinion for reasons other than as a result of material changes in law or facts prior to the Closing Date. For a more complete summary of the conditions that must be satisfied or waived (in accordance with the terms of the Merger Agreement) prior to the completion of the Merger, see the section entitled “The Merger Agreement—Conditions to Consummation of the Merger.”

 

Q:	What effects will the Merger have on Kellanova?

 

A:

Our Common Stock is currently registered under the Exchange Act, and it is quoted on the NYSE under the symbol “K.” As a result of the Merger, Kellanova will cease to be a publicly traded company and will become a wholly owned subsidiary of Acquiror. Following the consummation of the Merger, our Common Stock will be delisted from the NYSE and deregistered under the Exchange Act and Kellanova will no longer be required to file periodic reports with the SEC with respect to our Common Stock, in each case, in accordance with applicable law, rules and regulations.

 

Q:	How does the Merger Consideration compare to the market price of our Common Stock prior to the announcement of Kellanova’s entry into the Merger Agreement?

 

A:	The Merger Consideration of $83.50 per share in cash represents a premium of approximately 44% to Kellanova’s unaffected 30-trading day volume weighted average price and a premium of approximately 33% to Kellanova’s unaffected 52-week high as of August 2, 2024.

 

Q:	How can I vote my shares and participate at the Special Meeting?

 

A:

We urge you to read this proxy statement carefully, including its annexes and the documents incorporated by reference in this proxy statement, and to consider how the Merger affects you. If you are a Kellanova shareowner of record as of the close of business on the Record Date, you may submit your proxy before the Special Meeting in one of the following ways:

 

•

Telephone: use the toll-free number shown on your proxy card;

 

•

Internet: visit the website shown on your proxy card to vote via the Internet; or

 

•

Mail: complete, sign, date and return the enclosed proxy card in the enclosed postage-paid envelope.

If you are a Kellanova shareowner of record as of the close of business on the Record Date, you may also cast your vote virtually at the Special Meeting by attending the Special Meeting virtually at www.virtualshareholdermeeting.com/K2024SM. If you decide to attend the Special Meeting virtually and vote at the meeting, your vote will revoke any proxy previously submitted.

The Special Meeting will begin promptly at Noon Central Time, on November 1, 2024. Kellanova encourages its shareowners to access the meeting prior to the start time, leaving ample time for check-in.

 

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Please follow the instructions as outlined in this proxy statement. Even if you plan to attend the Special Meeting virtually, Kellanova requests that you complete, sign, date and return your proxy in advance as described below so that your shares will be represented and voted at the Special Meeting if you later decide not to or become unable to attend the Special Meeting.

 

Q:	How can I vote my shares without attending the Special Meeting?

 

A:

Whether you hold your shares directly as a shareowner of record of Kellanova or beneficially in “street name,” as of the close of business on the Record Date, you may direct your vote by proxy without attending the Special Meeting. You can submit your proxy by mail, over the Internet or by telephone by following the instructions provided on the enclosed proxy card. Please note that if you hold shares beneficially in “street name,” you should follow the voting instructions provided by your bank, broker, trust or other nominee. Additional information on voting procedures can be found in the section entitled “The Special Meeting of Kellanova’s Shareowners.”

 

Q:	When and where is the Special Meeting?

 

A:

The Special Meeting will be held virtually at www.virtualshareholdermeeting.com/K2024SM, on November 1, 2024, at Noon Central Time. Online access will begin at 11:45 a.m. Central Time, and Kellanova encourages its shareowners to access the meeting prior to the start time, leaving ample time for check-in. Even if you plan to attend the Special Meeting virtually, Kellanova requests that you complete, sign, date and return your proxy in advance as described above so that your shares will be represented and voted at the Special Meeting if you later decide not to or become unable to attend the Special Meeting.

 

Q:	What is the difference between holding shares as a shareowner of record and as a beneficial owner of shares held in “street name”?

 

A:

If your shares are held in “street name” in a stock brokerage account or by a broker, bank, trust or other nominee, you must provide your bank, broker, trust or other nominee with instructions on how to vote your shares. Please follow the voting instructions provided by your broker, bank, trust or other nominee. Please note that you may not vote shares held in street name by returning a proxy card directly to Kellanova or by voting in person at the Special Meeting unless you provide a “legal proxy,” which you must obtain from your broker, bank, trust or other nominee.

 

Q:	What if my shares of Common Stock are held in “street name” by my bank, broker, trust or other nominee?

 

A:

Broker non-votes are shares held by a broker, bank, trust or other nominee that are present in person or represented by proxy and entitled to vote at the Special Meeting, but with respect to which the broker, bank, trust or other nominee is not instructed by the beneficial owner of such shares on how to vote on a particular proposal and such broker, bank, trust or nominee does not have discretionary voting power on such proposal. Because brokers, banks, trusts and other nominee holders of record do not have discretionary voting authority with respect to any of the three proposals to be presented at the Special Meeting, if a beneficial owner of shares of Common Stock held in “street name” does not give voting instructions to the broker, bank, trust or other nominee with respect to any of the proposals, then those shares will not be present in person or represented by proxy and entitled to vote at the Special Meeting.

If you provide voting instructions to your broker, bank, trust or other nominee on one or more of the proposals but not on one or more of the other proposals, then your shares will not be treated as present or entitled to vote for the purposes of determining a quorum on any proposal for which you fail to provide instructions, and will not be voted on any such proposal, but will be treated as present and entitled to vote for the purposes of determining a quorum, and will be voted on any proposal for which you provide instructions. To make sure that your shares are voted with respect to each of the proposals, you should

 

22

instruct your bank, broker, trust or other nominee how you wish to vote your shares in accordance with the procedures provided by your bank, broker, trust or other nominee regarding the voting of your shares.

The effect of not instructing your bank, broker, trust or other nominee how you wish to vote your shares on any of the proposals will be the same as a vote “AGAINST” the Merger Proposal and will not have any effect on the outcome of the Adjournment Proposal or the Advisory Compensation Proposal.

If you instruct your bank, broker, trust or other nominee on how you wish to vote your shares on some proposals but not the Merger Proposal, the resulting broker non-vote will have the same effect as voting “AGAINST” the Merger Proposal.

If you instruct your bank, broker, trust or other nominee on how you wish to vote your shares on some proposals but not the Advisory Compensation Proposal, the resulting broker non-vote will not have any effect on the outcome of Advisory Compensation Proposal.

If you instruct your bank, broker, trust or other nominee on how you wish to vote your shares on some proposals but not the Adjournment Proposal, the resulting broker non-vote will not have any effect on the outcome of Adjournment Proposal.

 

Q:	What should I do if I receive more than one set of voting materials for the Special Meeting?

 

A:	If you hold shares of Common Stock in “street name” and also directly in your name as a shareowner of record or otherwise, or if you hold shares of Common Stock in more than one brokerage account, you may receive more than one set of voting materials relating to the Special Meeting.

Record Holders. For shares held directly, please complete, sign, date and return each proxy card, or you may submit your proxy by telephone or Internet as provided on each proxy card, or otherwise follow the voting instructions provided in this proxy statement in order to ensure that all of your shares of Common Stock are voted.

“Street Name” Holders. For shares held in “street name” through a bank, broker, trust or other nominee, you should follow the procedures provided by your bank, broker, trust or other nominee to vote your shares.

 

Q:	Should I send in my stock certificates or other evidence of ownership now?

 

A:

No. After the Merger is completed, you will receive a letter of transmittal and related materials from the payment agent for the Merger with detailed written instructions for exchanging your shares of Common Stock for the Merger Consideration. If your shares of Common Stock are held in “street name” by your broker, bank, trust or other nominee, you may receive instructions from your broker, bank, trust or other nominee as to what action, if any, you need to take to effect the surrender of your “street name” shares in exchange for the Merger Consideration. Do not send in your certificates now.

 

Q:	I do not know where my stock certificate is—how will I get the Merger Consideration for my shares?

 

A:

If the Merger is completed, the transmittal materials you will receive after the completion of the Merger will include the procedures that you must follow to receive the Merger Consideration, including, in the case of holders of stock certificates, if you cannot locate your stock certificate(s). This will include an affidavit that you will need to sign attesting to the loss of your stock certificate(s). Kellanova may also require that you provide a customary indemnity agreement to Kellanova in order to cover any potential loss.

 

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Q:	If a shareowner gives a proxy, how are the shares of Common Stock voted?

 

A:

Regardless of the method you choose to vote, the individuals named on the enclosed proxy card will vote your shares of Common Stock in the way that you indicate. When completing the proxy card or the Internet or telephone processes, you may specify whether your shares of Common Stock should be voted for or against, or abstain from voting on, all, some or none of the specific items of business to come before the Special Meeting.

 

Q:	How will my shares of Common Stock be voted if I return a blank proxy?

 

A:	If you sign, date and return your proxy card and do not indicate how you want your shares of Common Stock to be voted, then your shares of Common Stock will be voted “FOR” the Merger Proposal, “FOR” the Advisory Compensation Proposal and “FOR” the Adjournment Proposal.

 

Q:	Can I change my vote of shares of Common Stock after I have submitted my proxy?

 

A:	Yes. Any shareowner of record as of the close of business on the Record Date giving a proxy has the right to revoke it before the proxy is voted at the Special Meeting by:

 

•

subsequently submitting a new proxy, whether by submitting a new proxy card or by submitting a proxy via the Internet or telephone, that is received by the deadline specified on the accompanying proxy card;

 

•

giving written notice of your revocation to Kellanova’s Secretary; or

 

•

attending the Special Meeting virtually and voting.

Your attendance at the Special Meeting will not revoke your proxy unless you give written notice of revocation to Kellanova’s Secretary before your proxy is exercised or unless you vote your shares in person at the Special Meeting. Execution or revocation of a proxy will not in any way affect your right to attend the Special Meeting and vote. Written notices of revocation and other communications with respect to the revocation of proxies should be addressed to:

Kellanova

Attn: Office of the Secretary

412 N. Wells Street,

Chicago, Illinois 60654

For more information, please see the section entitled “The Special Meeting of Kellanova’s Shareowners—Revocation of Proxies.”

 

Q:	If I hold my shares in “street name,” can I change my voting instructions after I have submitted voting instructions to my bank, broker, trust or other nominee?

 

A:

If your shares are held in the name of a bank, broker, trust or other nominee and you previously provided voting instructions to your bank, broker, trust or other nominee, you should follow the instructions provided by your bank, broker, trust or other nominee to revoke or change your voting instructions.

 

Q:	Where can I find the voting results of the Special Meeting?

 

A:	The preliminary voting results for the Special Meeting will be announced at the Special Meeting. In addition, within four business days of the Special Meeting, Kellanova intends to file the final voting results of the Special Meeting with the SEC on a Current Report on Form 8-K.

 

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Q:	Am I entitled to appraisal rights?

 

A:

Yes. Under Section 262 of the DGCL, a shareowner who does not vote in favor of the Merger Proposal will be entitled to seek appraisal of its shares if such shareowner takes certain actions and certain criteria are satisfied. For more information, see the section entitled “Appraisal Rights.” A copy of Section 262 of the DGCL may be a copy of which may be accessed without subscription or cost at the following publicly available website: https://delcode.delaware.gov/title8/c001/sc09/index.html#262.

 

Q:	Do any of the officers or directors of Kellanova have interests in the Merger that may differ from or be in addition to my interests as a Kellanova shareowner?

 

A:

Yes. In considering the recommendation of the Board that Kellanova shareowners vote to approve the Merger Proposal, Kellanova shareowners should be aware that Kellanova’s directors and executive officers may have interests in the Merger that are different from, or in addition to, the interests of Kellanova shareowners generally. The Board was aware of these interests and considered, among other matters, in evaluating and approving the Merger Agreement and the Merger, and in recommending the approval of the Merger Proposal and the Advisory Compensation Proposal to Kellanova’s shareowners. See the section entitled “The Merger—Interests of Kellanova’s Directors and Executive Officers in the Merger.”

 

Q:	Why am I being asked to vote on the Advisory Compensation Proposal?

 

A:

The SEC rules require Kellanova to seek approval on a non-binding, advisory basis with respect to certain payments that will or may be made to Kellanova’s named executive officers in connection with the Merger. Approval of the Advisory Compensation Proposal is not required to complete the Merger. Accordingly, because Kellanova is contractually obligated to pay the compensation, if the Merger Proposal is adopted by Kellanova shareowners and the Merger is completed, the compensation will be payable, subject only to the conditions applicable thereto, regardless of the outcome of this advisory, non-binding vote.

 

Q:	What happens if I sell my shares of Common Stock after the Record Date but before the Special Meeting?

 

A:	The Record Date is earlier than the date of the Special Meeting. If you transfer your shares of Common Stock after the Record Date but before the Special Meeting, you will, unless special arrangements are made, retain your right to vote at the Special Meeting.

 

Q:	When is the Merger expected to be completed?

 

A:

Kellanova and Mars are working to be in a position to complete the Merger as quickly as possible after the Special Meeting. Kellanova currently anticipates that the Merger will be completed in the first half of 2025. In order to complete the merger, we must obtain the required Kellanova shareowner approval, approval under the HSR Act and certain other regulatory approvals, and a number of other closing conditions under the Merger Agreement must be satisfied or waived. See the section entitled “The Merger Agreement—Conditions to Consummation of the Merger.” Accordingly, there can be no assurances that the Merger will be completed at all, or if completed, that it will be completed in the first half of 2025.

 

Q:	What are the United States federal income tax considerations of the Merger for Kellanova shareowners?

 

A:

The receipt of cash by U.S. holders (as defined in the section entitled “The Merger—U.S. Federal Income Tax Considerations”) in exchange for shares of Common Stock pursuant to the Merger will generally be a taxable transaction for U.S. federal income tax purposes. In general, for U.S. federal income tax purposes,

 

25

a U.S. holder who receives cash in exchange for shares of Common Stock pursuant to the Merger will recognize capital gain or loss in an amount equal to the difference, if any, between (i) the amount of cash received in the Merger and (ii) the U.S. holder’s adjusted tax basis in its Common Stock exchanged therefor. Any gain realized by a non-U.S. holder (as defined in the section entitled “The Merger—U.S. Federal Income Tax Considerations”) pursuant to the Merger generally will not be subject to U.S. federal income tax unless such non-U.S. holder has certain connections to the United States. For a more detailed summary of the U.S. federal income tax consequences of the Merger, see the section entitled “The Merger—U.S. Federal Income Tax Considerations” beginning on page 78 of this proxy statement.

This proxy statement contains a general discussion of U.S. federal income tax considerations relating to the Merger. No information is provided with respect to the tax consequences of the Merger under any U.S. federal law other than income tax laws (including, for example the U.S. federal estate, gift, Medicare and alternative minimum tax laws), or any applicable state, local or non-U.S. tax laws. Consequently, holders of Common Stock should consult their tax advisors as to the tax consequences of the Merger relevant to their particular circumstances, including the applicability and effect of the alternative minimum tax and any state, local, non-U.S. or other tax laws and of changes in those laws.

 

Q:	What should I do now?

 

A:

You should read this proxy statement carefully and in its entirety, including the annexes and documents incorporated by reference, and return your completed, signed and dated proxy card by mail in the enclosed postage-paid envelope, or you may submit your voting instructions by telephone or over the Internet as soon as possible so that your shares will be voted in accordance with your instructions.

 

Q:	What is householding and how does it affect me?

 

A:

The SEC permits companies to send a single set of proxy materials to any household at which two or more shareowners reside, unless contrary instructions have been received, but only if the company provides advance notice and follows certain procedures. In such cases, each shareowner continues to receive a separate notice of the meeting and proxy card. Certain brokerage firms may have instituted householding for beneficial owners of common stock held through brokerage firms. If your family has multiple accounts holding common stock, you may have already received a householding notification from your broker. Please contact your broker directly if you have any questions or require additional copies of this proxy statement. The broker will arrange for delivery of a separate copy of this proxy statement promptly upon your written or oral request. You may decide at any time to revoke your decision to household, and thereby receive multiple copies.

 

Q:	Who will count the vote?

 

A:	A representative of Broadridge Financial Solutions, Inc. will tabulate the votes.

 

Q:	Who will solicit and bear the cost of soliciting votes for the Special Meeting?

 

A:

Kellanova will pay the entire cost of preparing, assembling, printing, mailing and distributing these proxy materials. In addition to the mailing of these proxy materials, the solicitation of proxies or votes may be made in person, by telephone or by electronic and facsimile transmission by our directors, officers and employees, who will not receive any additional compensation for such solicitation activities. Kellanova has engaged D.F. King & Co., Inc. to assist in the solicitation of proxies for the Special Meeting. Kellanova may reimburse its transfer agent, brokerage firms and other persons representing beneficial owners of shares of Common Stock for their expenses in forwarding solicitation material to such beneficial owners.

 

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Q:	Where can I find more information about Kellanova?

 

A:	You can find more information about us from various sources described in the section entitled “Where You Can Find More Information” beginning on page 122.

 

Q:	Whom do I call if I have questions about the Special Meeting or the Merger?

 

A:

If you have more questions about the Special Meeting or the Merger or how to submit your proxy, or if you need additional copies of this proxy statement or the enclosed proxy card or voting instructions, please contact the Investor Relations Department, Kellanova, P.O. Box 3599, Battle Creek, MI 49016-3599 (phone: (269) 961-2800), or investor.relations@kellanova.com.

You may also wish to consult your legal, tax and/or financial advisors with respect to any aspect of the Merger, the Merger Agreement or other matters discussed in this proxy statement.

 

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CAUTIONARY STATEMENT CONCERNING FORWARD-LOOKING INFORMATION

Certain statements and information in this proxy statement and the documents incorporated by reference herein may constitute “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933, as amended and Section 21E of the Exchange Act, including statements regarding the Merger, shareowner and regulatory approvals, the expected timetable for completing the Merger and any other statements regarding the Company’s future expectations, beliefs, plans, objectives, financial conditions, assumptions or future events or performance that are not historical facts. The words “believe,” “expect,” “anticipate,” “plan,” “intend,” “foresee,” “predict,” “budget,” “should,” “would,” “could,” “attempt,” “appears,” “forecast,” “outlook,” “estimate,” “continue,” “project,” “projection,” “goal,” “model,” “target,” “potential,” “may,” “will,” “objective,” “guidance,” “outlook,” “effort,” “are likely” and other similar expressions are intended to identify forward-looking statements, which are generally not historical in nature and convey the uncertainty of future events or outcomes, although not all forward-looking statements contain such identifying words. These forward-looking statements are based on Kellanova’s current expectations and beliefs concerning future developments and their potential effect on their respective businesses.

The forward-looking statements contained in this document speak only as of the date of this proxy statement and are largely based on Kellanova’s expectations for the future, which reflect certain estimates and assumptions made by Kellanova management, and Kellanova undertakes no obligation to update or revise any forward-looking statements made herein, except as required by law. These estimates and assumptions reflect Kellanova’s best judgment based on currently known market conditions, operating trends and other factors. Although Kellanova believes such estimates and assumptions to be reasonable, they are inherently uncertain and involve a number of risks and uncertainties that are beyond Kellanova’s control. As such, Kellanova management’s assumptions about future events may prove to be inaccurate. For a more detailed description of the risks and uncertainties involved, see “Risk Factors” in Kellanova’s most recently filed Annual Reports on Form 10-K, subsequent Quarterly Reports on Form 10-Q, Current Reports on Form 8-K and other SEC filings.

These cautionary statements qualify all forward-looking statements attributable to Kellanova, or persons acting on Kellanova’s behalf. Kellanova management cautions you that the forward-looking statements contained in this proxy statement are not guarantees of future performance, and Kellanova cannot assure you that such statements will be realized or that the events and circumstances they describe will occur. Kellanova can give no assurance that the conditions to the Merger will be satisfied, or that it will close within the anticipated time period. Factors that could cause actual results to differ materially from those anticipated or implied in the forward-looking statements herein include, but are not limited to:

 

•

failure to obtain the required vote of Kellanova’s shareowners in connection with the Merger;

 

•

the risk that Mars or Kellanova may be unable to obtain governmental and regulatory approvals required for the transaction, or that required governmental and regulatory approvals may delay the transaction or result in the imposition of conditions that could reduce the anticipated benefits from the Merger or cause the parties to abandon the Merger;

 

•

the risk that a condition to Closing may not be satisfied or waived;

 

•

the length of time necessary to consummate the Merger, which may be longer than anticipated for various reasons, and the risk that the Merger may not be completed at all;

 

•

the financial performance of Kellanova through the completion of the Merger;

 

•

the risk that the Merger disrupts Kellanova’s current operations and plans;

 

•

the risks related to the disruption of management’s attention from ongoing operations due to the Merger;

 

•

the amount of the costs, fees, expenses and charges related to the Merger Agreement;

 

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•

limitations placed on Kellanova’s ability to operate its business under the Merger Agreement, which may impact the Company’s ability to pursue certain business opportunities or strategic transactions;

 

•

competitive responses to the Merger;

 

•

the occurrence of any event that could give rise to the termination of the Merger Agreement, including under circumstances that require Kellanova to pay Acquiror the Termination Fee;

 

•

the risk that shareowner litigation in connection with the Merger may affect the timing or occurrence of the Merger or result in significant costs of defense, indemnification and liability;

 

•

the effect of the announcement or pendency of the Merger on Kellanova’s ability to retain and hire key personnel and other employees or Kellanova’s business relationships (including customers and suppliers), operating results and business generally;

 

•

the risk that any announcements relating to the Merger could have adverse effects on the market price of the Company’s Common Stock, credit ratings or operating results;

 

•

risks related to our indebtedness and continued availability of capital and financing and rating agency actions;

 

•

general macroeconomic conditions and further deterioration or a protracted extension of current macroeconomic challenges;

 

•

other business effects, including the effects of industry, market, economic or regulatory conditions; and

 

•

the other factors that are described from time to time in Kellanova’s periodic filings with the SEC, including its Annual Report on Form 10-K for the fiscal year ended December 30, 2023. See the section entitled “Where You Can Find More Information” for documents incorporated by reference into this proxy statement.

 

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THE PARTIES TO THE MERGER

Kellanova

Kellanova is a leader in global snacking, international cereal and noodles, and North America frozen foods with a legacy stretching back more than 100 years. Powered by differentiated brands including Pringles^®, Cheez-It^®, Pop-Tarts^®, Kellogg’s Rice Krispies Treats^®, RXBAR^®, Eggo^®, MorningStar Farms^®, Special K^®, Coco Pops^®, and more, Kellanova’s vision is to become the world’s best-performing snacks-led company, unleashing the full potential of our differentiated brands and our passionate people. Our net sales for 2023 were $13 billion.

A detailed description of Kellanova’s business is contained in Kellanova’s Annual Report filed on Form 10-K for the fiscal year ended December 30, 2023, which is incorporated by reference into this proxy statement. See the section entitled “Where You Can Find More Information” beginning on page 122.

The Common Stock is listed and traded on the NYSE under the ticker symbol “K.” Kellanova has its executive offices located at 412 N. Wells Street, Chicago, IL 60654.

Mars, Incorporated

Mars, Incorporated, a Delaware corporation, which we refer to as “Mars,” is a global, family-owned business, Mars employs over 150,000 associates. With more than $50 billion in annual sales, Mars produces some of the most well-known brands including Ben’s Original^™, CESAR^®, Cocoavia^®, DOVE^®, EXTRA^®, KIND^®, M&M’s^®, SNICKERS^®, PEDIGREE^®, ROYAL CANIN^®, and WHISKAS^®. Mars has a global network of pet hospitals and diagnostic services – including AniCura, BANFIELD^™, BLUEPEARL^™, Linnaeus and VCA^™ – and it develops programs in genetic health screening and DNA testing. Mars has its executive offices located at 1676 International Drive, Suite 1000, McLean, Virginia 22102.

Acquiror 10VB8, LLC

Acquiror 10VB8, LLC, which we refer to as Acquiror, is a Delaware limited liability company and a subsidiary of Mars.

Merger Sub 10VB8, LLC

Merger Sub 10VB8, LLC, which we refer to as Merger Sub, is a Delaware limited liability company and a wholly owned subsidiary of Acquiror that was formed solely for the purpose of entering into the Merger Agreement and consummating the transactions contemplated by the Merger Agreement.

 

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THE SPECIAL MEETING OF KELLANOVA’S SHAREOWNERS

General

This proxy statement is first being mailed on or about September 26, 2024 and constitutes notice of the Special Meeting in conformity with the requirements of the DGCL and the Bylaws.

This proxy statement is being provided to Kellanova shareowners as part of a solicitation of proxies by the Board for use at the Special Meeting and at any adjournment or postponement of the Special Meeting. Kellanova shareowners are encouraged to read the entire document carefully, including the annexes to this document, for more detailed information regarding the Merger Agreement and the transactions contemplated by the Merger Agreement.

Date, Time and Place

The Special Meeting will be held virtually on November 1, 2024, at Noon Central Time. The Special Meeting can be accessed by visiting www.virtualshareholdermeeting.com/K2024SM, where Kellanova shareowners will be able to participate and vote online. This proxy statement is first being furnished to Kellanova shareowners on or about September 26, 2024. For purposes of attendance at the Special Meeting, all references in the accompanying proxy statement to “present in person,” “in person” or “attend” will mean virtually present at or to attend virtually the Special Meeting.

Purpose of the Special Meeting

At the Special Meeting, Kellanova shareowners will be asked to consider and vote on the following:

 

•

the Merger Proposal;

 

•

the Advisory Compensation Proposal; and

 

•

the Adjournment Proposal.

Kellanova will transact no other business at the Special Meeting except such business as may properly be brought before the Special Meeting or any adjournment or postponement thereof. This proxy statement, including the Merger Agreement attached hereto as Annex A, contains further information with respect to these matters.

Recommendation of the Board

The Board has unanimously (i) determined that the terms of the Merger Agreement and the transactions contemplated thereby, including the Merger, are fair to, and in the best interests of, Kellanova and Kellanova shareowners; (ii) determined that it is in the best interests of Kellanova and Kellanova shareowners, and declared it advisable, to enter into, and adopted, the Merger Agreement providing for the Merger, upon the terms and subject to the conditions set forth therein and in accordance with the applicable provisions of the DGCL; (iii) approved and authorized the execution and delivery of the Merger Agreement, the performance of Kellanova’s covenants and other obligations thereunder and the consummation of the Merger upon the terms and subject to the conditions set forth in the Merger Agreement; (iv) resolved to recommend that Kellanova shareowners vote in favor of the adoption of the Merger Agreement and the transactions contemplated thereby, including the Merger, in accordance with the DGCL and to include such recommendation in this proxy statement; and (v) directed that the adoption of the Merger Agreement be submitted for consideration by Kellanova shareowners at a meeting thereof. A description of factors considered by the Board in reaching its decision to approve and declare advisable the foregoing proposals can be found in the section entitled “The Merger—Recommendation of the Board and Its Reasons for the Merger” beginning on page 46.

The Board unanimously recommends that Kellanova shareowners vote “FOR” the Merger Proposal, “FOR” the Advisory Compensation Proposal and “FOR” the Adjournment Proposal at the Special Meeting.

 

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Kellanova shareowners’ approval of Merger Proposal is a condition for the Merger to occur. If Kellanova shareowners fail to approve the Merger Proposal by the requisite vote, the Merger will not occur.

Record Date; Shareowners Entitled to Vote

Only holders of record of outstanding shares of Common Stock as of the close of business on September 24, 2024, the Record Date for the Special Meeting, will be entitled to notice of, and to virtually vote at, the Special Meeting and any adjournment or postponement of the Special Meeting unless a new record date is fixed in connection with any adjournment or postponement of the Special Meeting. At the close of business on the Record Date, 344,684,757 shares of Common Stock were issued and outstanding.

Holders of Common Stock are entitled to one vote for each share of Common Stock they own at the close of business on the Record Date.

A list of the names of shareowners entitled to vote at the Special Meeting will be available for a period of at least ten days prior to the Special Meeting. To arrange review of the list of shareowners for any purpose relevant to the Special Meeting, please contact Investor Relations at (269) 961-2800. The shareowner list will also be available during the virtual Special Meeting for examination by shareowners at www.virtualshareholdermeeting.com/K2024SM.

Quorum; Adjournment

The presence at the Special Meeting of the holders of a majority of the outstanding shares of Common Stock entitled to vote thereon and present in person or represented by proxy will constitute a quorum with respect to a proposal. As a result, with respect to any proposal, there must be a majority of all of our outstanding shares of Common Stock represented by proxy or by shareowners present at the Special Meeting in order to have a quorum with respect to such proposal. Virtual attendance by Kellanova shareowners of record at the Special Meeting will constitute presence in person for the purpose of determining the presence of a quorum for the transaction of business at the Special Meeting.

Abstentions are counted as present at the Special Meeting for purposes of determining whether a quorum exists. If you provide voting instructions to your broker, bank, trust or other nominee on one or more of the proposals but not on one or more of the other proposals, then your shares will not be treated as present or entitled to vote for the purposes of determining a quorum on any proposal for which you fail to provide instructions, and will not be voted on any such proposal, but will be treated as present and entitled to vote for the purposes of determining a quorum, and will be voted on any proposal for which you provide instructions.

Failure of a quorum to be represented at the Special Meeting may result in an adjournment of the Special Meeting and may subject Kellanova to additional expense. Even if a quorum is present, the Special Meeting may also be adjourned one or more times in order to provide more time to solicit additional proxies in favor of approval of the Merger Proposal if sufficient votes are cast in favor of the Adjournment Proposal. In addition, the Special Meeting may be postponed by the presiding chairman.

Notice need not be given of any adjourned meeting if the time and place, if any, thereof and the means of remote communications, if any, by which shareowners and proxy holders may be deemed to be present in person and vote at such adjourned meeting are announced at the meeting at which the adjournment is taken unless the adjournment is for more than 30 days, in which case a notice of the adjourned meeting will be given to each shareowner of record entitled to vote at the meeting. If, after any adjournment, a new record date for Kellanova shareowners entitled to vote is fixed for any adjourned meeting, the Board must fix a record date for notice of any adjourned meeting in accordance with the DGCL and provide a new notice of any adjourned meeting to each shareowner of record entitled to vote at the meeting. In addition, the Special Meeting could be postponed before it commences.

 

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If the Special Meeting is adjourned or postponed one or more times for the purpose of soliciting additional votes, Kellanova shareowners who have already submitted their proxies will be able to revoke them at any time prior to the final vote on the proposals. If you submit your proxy over the Internet or by telephone or submit a properly executed proxy card, even if you abstain from voting, your shares will be counted as present for purposes of determining whether a quorum exists at the Special Meeting.

Required Vote

Approval of Merger Proposal

The approval of the Merger Proposal requires the affirmative vote of the holders of a majority of the outstanding shares of Common Stock entitled to vote as of the close of business on the Record Date. Accordingly, if a quorum is present in person or represented by proxy at the Special Meeting, shares deemed not in attendance at the Special Meeting (whether due to a record holder’s failure to vote or a “street name” holder’s failure to provide any voting instructions to such holder’s bank, broker or other nominee) and abstentions will have the same effect as a vote “AGAINST” the Merger Proposal.

Pursuant to the Voting Agreements, each Voting Agreement Shareowner agreed, upon the terms and subject to the conditions of its respective Voting Agreement, among other things, to vote all of the shares of Common Stock held by it in favor of the Merger Proposal at the Special Meeting. For more information, please see the section entitled “The Voting Agreements.” For more information regarding the security ownership of the Kellogg Foundation Trust, G. Zachary Gund Entities and Gund Trusts, please see the section entitled “Certain Beneficial Owners of Common Stock.”

Approval of Advisory Compensation Proposal

If a quorum is present at the Special Meeting, the approval of the Advisory Compensation Proposal, on an advisory, non-binding basis, requires the affirmative vote of a majority of shares of Common Stock present, in person or represented by proxy. Accordingly, shares deemed not in attendance at the Special Meeting (whether due to a record holder’s failure to vote or a “street name” holder’s failure to provide any voting instructions to such holder’s bank, broker or other nominee) will have no effect on the outcome of the Advisory Compensation Proposal. Abstentions will have the same effect as a vote “AGAINST” the Advisory Compensation Proposal.

Approval of Adjournment Proposal

If a quorum is present at the Special Meeting, the approval of the Adjournment Proposal requires the affirmative vote of a majority of shares of Common Stock present, in person or represented by proxy. Accordingly, shares deemed not in attendance at the Special Meeting (whether due to a record holder’s failure to vote or a “street name” holder’s failure to provide any voting instructions to such holder’s bank, broker or other nominee) will have no effect on the outcome of the Adjournment Proposal. Abstentions will have the same effect as a vote “AGAINST” the Adjournment Proposal.

The Merger is conditioned on, among other things, the approval of the Merger Proposal at the Special Meeting. The Advisory Compensation Proposal and the Adjournment Proposal are not conditioned on the approval of any other proposal set forth in this proxy statement and are not conditions to the consummation of the Merger.

Abstentions and Broker Non-Votes

An abstention occurs when a shareowner attends a meeting, either in person or by proxy, but abstains from voting. Abstentions will be treated as present for purposes of determining the presence of a quorum. Abstaining from voting will have the same effect as voting “AGAINST” the Merger Proposal, the Advisory Compensation Proposal and the Adjournment Proposal.

 

33

If no instruction as to how to vote is given (including no instruction to abstain from voting) in an executed, duly returned and not revoked proxy, the proxy will be voted in accordance with the Board’s recommendation with respect to each proposal and consequently will be voted “FOR” each of (i) the Merger Proposal, (ii) the Advisory Compensation Proposal, and (iii) the Adjournment Proposal.

Broker non-votes are shares held by a broker, bank, trust or other nominee that are present in person or represented by proxy and entitled to vote at the Special Meeting, but with respect to which the broker, bank or other nominee is not instructed by the beneficial owner of such shares on how to vote on a particular proposal and the broker does not have discretionary voting power on such proposal. Because brokers, banks and other nominee holders of record do not have discretionary voting authority with respect to any of the three proposals to be presented at the Special Meeting, if a beneficial owner of shares of the Company’s Common Stock held in “street name” does not give voting instructions to the broker, bank, trust or other nominee with respect to any of the proposals, then those shares will not be present in person or represented by proxy and entitled to vote at the Special Meeting. If you provide voting instructions to your broker, bank, trust or other nominee on one or more of the proposals but not on one or more of the other proposals, then your shares will not be treated as present or entitled to vote for the purposes of determining a quorum on any proposal for which you fail to provide instructions, and will not be voted on any such proposal, but will be treated as present and entitled to vote for the purposes of determining a quorum and will be voted on any proposal for which you provide instructions.

Failure to Vote

If you are a Kellanova shareowner of record and you do not sign and return your proxy card or submit your proxy over the Internet, by telephone or at the Special Meeting, your shares will not be voted at the Special Meeting, will not be counted as present in person or by proxy at the Special Meeting, and will not be counted as present for purposes of determining whether a quorum exists.

For purposes of the Merger Proposal, a failure of record owners to vote, or a failure of beneficial owners to instruct their bank, broker, trust or other nominee to vote, will have the same effect as a vote “AGAINST” the Merger Proposal. A failure of record owners who are not present in person or represented by proxy at the Special Meeting to vote, or a failure of beneficial owners to instruct their bank, broker, trust or other nominee to vote, will have no effect on the outcome of either of the Advisory Compensation Proposal or the Adjournment Proposal. All abstentions from voting will have the same effect as a vote “AGAINST” the Merger Proposal, the Advisory Compensation Proposal and the Adjournment Proposal.

If you are a Kellanova shareowner of record and you sign, date and return your proxy card and do not indicate how you want your shares of Common Stock to be voted, then your shares of Common Stock will be voted “FOR” the Merger Proposal, “FOR” the Advisory Compensation Proposal, and “FOR” the Adjournment Proposal.

Voting by Kellanova’s Directors and Executive Officers

At the close of business on September 3, 2024, Kellanova’s directors and current executive officers and their affiliates, as a group, beneficially owned and were entitled to vote approximately 4,745,073 shares of Common Stock, collectively representing approximately 1.4% of the shares of Common Stock outstanding on that date. Directors and executive officers of Kellanova have informed Kellanova that they intend to vote their shares in favor of the Merger Proposal, the Advisory Compensation Proposal and the Adjournment Proposal, although none of the directors and executive officers are obligated to do so, except as noted below. As noted above, pursuant to the Voting Agreements, and subject to the terms and conditions thereof, each Voting Agreement Shareowner agreed, among other things, subject to the terms and conditions of its respective Voting Agreement, to vote all of the shares of Common Stock held by it in favor of the Merger Proposal at the Special Meeting. For more information, please see the section entitled “The Voting Agreements.” For more information regarding the security ownership of the Kellogg Foundation Trust, G. Zachary Gund Entities and Gund Trusts, please see the section entitled “Certain Beneficial Owners of Common Stock.”

 

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Voting at the Special Meeting

The Special Meeting will be a completely virtual meeting. There will be no physical meeting location and the meeting will only be conducted via live webcast. The virtual Special Meeting will be held on November 1, 2024 at Noon Central Time. To participate in the Special Meeting and submit questions during the Special Meeting, visit www.virtualshareholdermeeting.com/K2024SM and enter the 16-digit control number on the proxy card, voting instruction form or notice you received. Online check-in will begin at 11:45 a.m. Central Time. Please allow time for online check-in procedures. The virtual shareowner meeting format uses technology designed to increase shareowner access, save Kellanova and Kellanova shareowners time and money, and provide Kellanova shareowners rights and opportunities to participate in the meeting similar to what they would have at an in-person meeting. In addition to online attendance, Kellanova provides shareowners with an opportunity to hear all portions of the official meeting, submit written questions and comments during the meeting, and vote online during the open poll portion of the meeting. Although Kellanova offers four different voting methods, Kellanova encourages you to submit a proxy to vote either over the Internet or by telephone to ensure that your shares are represented and voted at the Special Meeting.

 

•

To Submit a Proxy to Vote over the Internet or by Telephone: You may submit your proxy by following the instructions provided with your proxy materials and on your proxy card or voting instruction card. The telephone and Internet voting procedures have been set up for your convenience and have been designed to authenticate your identity, to allow you to give voting instructions, and to confirm that those instructions have been recorded properly. If you choose to submit your vote via proxy over the Internet or by telephone, you must do so prior to 11:59 p.m. Eastern Time on October 31, 2024.

 

•

To Submit a Proxy by Mail: To submit a proxy to vote by mail, complete, sign and date the proxy card and return it promptly to the address indicated on the proxy card in the postage-paid envelope provided. If you sign and return your proxy card without indicating how you want your shares of Common Stock to be voted with regard to a particular proposal, your shares of Common Stock will be voted in favor of such proposal. If you return your proxy card without a signature, your shares will not be counted as present at the Special Meeting and cannot be voted.

 

•

To Vote Virtually at the Special Meeting: To vote virtually at the Special Meeting to be held on November 1, 2024 at Noon Central Time, visit www.virtualshareholdermeeting.com/K2024SM and enter the 16-digit control number on the proxy card, voting instruction form or notice you received. Online check-in will begin at 11:45 a.m. Central Time, on November 1, 2024. If your shares are held by your bank, broker, trust or other nominee, you are considered the beneficial owner of shares held in “street name” and you will receive a vote instruction form from your bank, broker, trust or other nominee seeking instruction from you as to how your shares should be voted. If you are a Kellanova shareowner of record and you sign your proxy, but do not indicate how you wish to vote, your shares will be voted “FOR” the Merger Proposal, “FOR” the Advisory Compensation Proposal, and “FOR” the Adjournment Proposal.

Revocation of Proxies

You can change or revoke your proxy at any time before the final vote at the Special Meeting. If you are the shareowner of record of your shares, you may revoke your proxy by:

 

•

submitting another proxy over the Internet or by telephone prior to the start of the Special Meeting or otherwise timely delivering a valid, later-dated proxy;

 

•

timely delivering a written notice that you are revoking your proxy to Kellanova’s Secretary; or

 

•

attending the Special Meeting and voting. Your virtual attendance at the Special Meeting will not revoke your proxy unless you give written notice of revocation to Kellanova’s Secretary before your proxy is exercised or unless you vote your shares in person at the Special Meeting. If you are the beneficial owner of shares held in “street name,” you should contact your bank, broker, trust or other nominee with questions about how to change or revoke your voting instructions.

 

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Solicitation of Proxies

The Board is soliciting your proxy in connection with the Special Meeting, and Kellanova will bear the cost of soliciting such proxies, including the costs of printing and filing this proxy statement. Kellanova has retained D.F. King & Co., Inc. as proxy solicitor to assist with the solicitation of proxies in connection with the Special Meeting. Kellanova estimates it will pay D.F. King & Co., Inc. a fee of approximately $25,000, in addition to the reimbursement of expenses, for these services. Solicitation initially will be made by mail. Forms of proxies and proxy materials may also be distributed through banks, brokers and other nominees to the beneficial owners of shares of Common Stock, in which case these parties will be reimbursed for their reasonable out-of-pocket expenses. Proxies may also be solicited in person or by telephone, facsimile, electronic mail, or other electronic medium by certain of Kellanova’s directors, officers and employees, without additional compensation.

Tabulation of Votes

Broadridge Financial Solutions, Inc. will tabulate the votes at the Special Meeting.

Householding of Special Meeting Materials

Each registered Kellanova shareowner will receive one copy of this proxy statement per account, regardless of whether you have the same address as another shareowner of record. SEC rules permit companies and intermediaries such as brokers to satisfy delivery requirements for proxy statements and notices with respect to two or more shareowners sharing the same address by delivering a single proxy statement or a single notice addressed to those shareowners. This process, commonly called “householding,” provides cost savings for companies. If you hold shares through a broker, some brokers household proxy materials, delivering a single proxy statement or notice to multiple shareowners sharing an address unless contrary instructions have been received from the affected shareowners. Once you have received notice from your broker that it will be householding materials to your address, householding will continue until you are notified otherwise or until you revoke your consent. If, at any time, you no longer wish to participate in householding and would prefer to receive a separate proxy statement or notice, or if your household is receiving multiple copies of these documents and you wish to request that future deliveries be limited to a single copy, please notify your broker.

Kellanova will promptly deliver, upon oral or written request, a separate copy of this proxy statement to any Kellanova shareowner residing at an address to which only one copy was mailed. Requests for additional copies should be directed to the Investor Relations Department, Kellanova, P.O. Box 3599, Battle Creek, MI 49016-3599, or contact Investor Relations by telephone at (269) 961-2800 or by email at investor.relations@kellanova.com.

Questions

If you have more questions about the Merger or how to submit your proxy, or if you need additional copies of this proxy statement or the enclosed proxy card or voting instructions, please contact the Investor Relations Department, Kellanova, P.O. Box 3599, Battle Creek, MI 49016-3599 or by email at investor.relations@kellanova.com.

Assistance

If you need assistance voting or in completing your proxy card or have questions regarding the Special Meeting, please contact Kellanova’s proxy solicitation agent:

D.F. King & Co., Inc.

48 Wall Street, 22nd Floor

New York, NY 10005

Toll-Free: (800) 791-3319

Email: K@dfking.com

 

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THE MERGER (PROPOSAL 1)

The discussion of the Merger and the Merger Agreement in this proxy statement is qualified in its entirety by reference to the complete text of the Merger Agreement, which is attached to this proxy statement as Annex A. You should read the Merger Agreement carefully in its entirety.

Background of the Merger

The following chronology summarizes the key meetings and events that led to the signing of the Merger Agreement. The following chronology does not purport to catalogue every conversation of, or among, the Board, representatives of Kellanova, Mars or their respective advisors and other parties.

The Board, together with Kellanova senior management, regularly reviews and assesses Kellanova’s financial performance and long-term strategic plans and objectives in light of developments in Kellanova’s business, the industry in which it operates, and economic, market and industry conditions generally. These reviews and assessments have included, among other things, consideration of various potential opportunities for dispositions, acquisitions, business combinations and separations with the goal of enhancing shareowner value. In June 2022, as a result of these regular reviews, Kellanova announced a plan to separate its North American cereal business, via a tax-free spin-off, resulting in the creation of a new independent public company, which spin-off was completed in October 2023 (the “Spin Transaction”).

On May 31, 2024, at the unsolicited request of Mr. Poul Weihrauch, Chief Executive Officer of Mars, Mr. Steven Cahillane, Chairman, President and Chief Executive Officer of Kellanova, and Mr. Weihrauch met for lunch at the Chicago office of Skadden, Arps, Slate, Meagher & Flom LLP (“Skadden”), legal counsel to Mars. During this lunch, Mr. Weihrauch expressed Mars’ interest in a combination transaction with Kellanova and indicated that he would be sending a letter shortly detailing Mars’ interest in Kellanova. Also on May 31, 2024, following this meeting, Mr. Weihrauch, on behalf of Mars, sent Mr. Cahillane an unsolicited, non-binding offer letter to acquire all of the issued and outstanding shares of Common Stock for $77.00 per share in cash (the “May Offer”). The May Offer included a priority due diligence request list, requested a four-week timeline for Mars to complete its due diligence review of Kellanova and indicated that certain banks had already reviewed Mars’ proposed acquisition and were prepared to provide fully committed financing for the proposed acquisition, subject to finalization of Mars’ due diligence and other transaction terms. Mr. Cahillane indicated to Mr. Weihrauch that he would share the May Offer with the Board.

On June 5, 2024, the Board held a special meeting by videoconference. Members of Kellanova’s senior management and representatives of each of Goldman Sachs and Kirkland & Ellis LLP (“Kirkland”), outside legal counsel to Kellanova, were also in attendance. At that meeting, Mr. Cahillane discussed with the Board the May Offer, which had been provided to the Board in advance of the meeting. Also at that meeting, representatives of Goldman Sachs delivered a presentation that outlined the financial profile of Kellanova and Goldman Sachs’ preliminary financial analysis with respect to the May Offer. Representatives of Kirkland then reviewed with the Board its fiduciary duties under Delaware law and discussed certain legal considerations for the Board in connection with a potential acquisition transaction, including, among other things, the importance of confidentiality, guidance in responding to unsolicited acquisition inquiries and potential approaches to conducting a market check. Following discussion at the meeting, the Board determined to decline the May Offer because the Board believed that it undervalued Kellanova and the Board believed that management of Kellanova would deliver on its strategic plan for fiscal years 2025 through 2027 (the “Strategic Plan”), which contained financial projections prepared by Kellanova management which reflected the actual results of the first quarter of fiscal year 2024 and projections for the remainder of fiscal year 2024 and fiscal years 2025 through 2027 and was reviewed during the meeting, which would result in greater value to Kellanova shareowners than the May Offer.

On June 6, 2024, Mr. Cahillane sent Mr. Weihrauch a letter which indicated that the Board did not support the May Offer. This letter noted that the Board was confident in its ability to deliver results consistent

 

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with Kellanova management’s strategic plan and that doing so would result in a valuation for Kellanova in excess of the May Offer.

On June 10, 2024, Mr. Cahillane and Mr. Weihrauch met in-person at the Chicago office of Skadden to discuss the May Offer. Mr. Cahillane informed Mr. Weihrauch that the Board believed the May Offer undervalued Kellanova, that the Board was confident in Kellanova’s future prospects as a standalone public company and that the Board had decided to decline the May Offer.

On June 14, 2024, representatives of Citigroup Global Markets Inc. (“Citi”), Mars’ financial advisor, and Goldman Sachs connected to discuss the May Offer. Goldman Sachs reiterated Kellanova’s confidence in executing its strategic plan and indicated that the Company was not willing to provide access to diligence based on the May Offer.

On June 21, 2024, Mr. Weihrauch sent Mr. Cahillane a revised non-binding offer letter (the “June Offer”). The June Offer reiterated Mars’ interest in acquiring Kellanova and increased Mars’ proposal to acquire Kellanova from $77.00 per share of Common Stock in cash to $80.00 per share of Common Stock in cash. The June Offer did not include any new terms from the May Offer and again requested information regarding Kellanova for purposes of Mars’ due diligence. Mr. Cahillane indicated to Mr. Weihrauch that he would share the June Offer with the Board.

On June 26, 2024, the Board held a special meeting by videoconference. Members of Kellanova’s senior management and representatives of each of Goldman Sachs and Kirkland were also in attendance. At that meeting, Mr. Cahillane discussed with the Board the June Offer, a copy of which had been provided to the Board in advance of the meeting, and the increased valuation of $80.00 per share of Common Stock in cash. Also at that meeting, representatives from Goldman Sachs delivered a presentation that outlined, among other things, Goldman Sachs’ preliminary financial analysis of the June Offer. After discussion at that meeting, the Board determined that the June Offer’s increased valuation of $80.00 per share of Common Stock in cash still undervalued Kellanova. The Board reaffirmed its confidence that Kellanova’s management would be able to deliver business results consistent with the Strategic Plan and that the value created on a standalone basis would exceed the proposal in the June Offer. However, the Board authorized Kellanova’s management to provide Mars with limited financial due diligence information in order to enable Mars to increase its proposal to acquire Kellanova, including the Strategic Plan.

On June 28, 2024, Mr. Cahillane sent Mr. Weihrauch a letter which indicated that the Board did not support the June Offer. This letter also informed Mr. Weihrauch of the Board’s decision to provide Mars with limited financial due diligence information and provided further detail on the reasons the Board did not support the June Offer, which related in part to Mars’ valuation methodology and related use of certain financial metrics in arriving at the June Offer.

Also on June 28, 2024, representatives of Citi and Goldman Sachs connected to discuss Kellanova’s response to the June Offer and next steps, including access to diligence and potential management discussions.

Also on June 28, 2024, at the direction of Kellanova management, representatives of Goldman Sachs sent representatives of Citi a draft confidentiality agreement. On July 4, 2024, Kellanova entered into the confidentiality agreement with Mars, which contained customary nondisclosure and nonuse provisions, as well as a customary standstill provision containing standard fall-away rights.

On July 6, 2024, Mars and its advisors were provided with access to a virtual data room containing limited financial due diligence information regarding Kellanova, including the Strategic Plan. Thereafter and through the date of the Merger Agreement, Mars engaged in an extensive review of the virtual data room.

On July 16, 2024, Kellanova management contacted representatives of Lazard and informed Lazard of Mars’ interest in a strategic transaction with Kellanova. Kellanova management requested that representatives of

 

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Lazard attend the next regularly scheduled board meeting, during which the Board, Kellanova management and representatives of each of Goldman Sachs and Kirkland intended to discuss the potential transaction with Mars.

On July 17, 2024, the Board formally engaged Goldman Sachs as Kellanova’s financial advisor in connection with a potential acquisition transaction. The Board selected Goldman Sachs as its financial advisor based on Goldman Sachs’ qualifications, expertise and reputation and its familiarity and knowledge of Kellanova’s business and affairs, including acting as financial advisor in connection with the Spin Transaction, and the industries in which it operates.

On July 22, 2024, representatives of each of Goldman Sachs and Citi and members of Kellanova’s senior management and Mars’ senior management held a meeting at the New York offices of Skadden to discuss Kellanova’s business, financials and performance and various aspects of Kellanova’s Strategic Plan, including, among other topics, the growth drivers for Kellanova’s businesses by region, the key levers of margin expansion by region and the components of gross margin expansion, Kellanova’s capital investment plans and other diligence topics.

On July 23, 2024, Mr. Weihrauch sent Mr. Cahillane a revised non-binding offer letter (the “July 23 Offer”). The July 23 Offer reiterated Mars’ interest in acquiring Kellanova and increased Mars’ proposal to acquire Kellanova from $80.00 per share of Common Stock in cash to $82.00 per share of Common Stock in cash. Attached to the July 23 Offer was an initial draft of the Merger Agreement. The initial draft of the Merger Agreement contemplated, among other things, that the Gund family and the Kellogg Foundation Trust would enter into voting agreements concurrently with Kellanova’s and Mars’ entry into the Merger Agreement, a reverse termination fee in an amount to be determined, payable by Mars in certain circumstances, a termination fee in an amount to be determined, payable by Kellanova in certain circumstances, an outside date of 12 months from signing, subject to one automatic six-month extension to obtain required regulatory approvals, a regulatory efforts covenant requiring both Kellanova and Mars to use their reasonable best efforts to obtain required regulatory approvals, subject to a “Burdensome Condition” standard (which, among other things, would not require Mars to divest Kellanova assets that generated more than a to be determined amount of revenue in the 12-month period ending as of December 31, 2023, applicable to such regulatory efforts), that Kellanova would be restricted from declaring or paying any dividend on its Common Stock and a non-solicitation provision that prohibited Kellanova from soliciting or participating in discussions with third parties regarding takeover proposals, subject to certain customary exceptions for potential superior proposals.

On July 24, 2024, Goldman Sachs delivered a relationship disclosure letter, which was dated as of July 24, 2024, to members of Kellanova’s senior management, who then submitted the relationship disclosure letter to the Board on July 25, 2024.

On July 25, 2024, the Board held a regularly scheduled Board meeting, with members of Kellanova’s senior management and representatives of each of Goldman Sachs, Kirkland and Lazard in attendance. At that meeting, representatives from Goldman Sachs delivered a presentation to the Board that, among other things, summarized the offer history in selected precedent transactions, provided an illustrative analysis of the ability of other potential strategic acquirors to provide Kellanova with an offer exceeding the July 23 Offer, and outlined Goldman Sachs’ preliminary financial analysis of the July 23 Offer based on the financial projections contained in the Strategic Plan, which had been updated by Kellanova management to reflect the actual results of the first and second quarters of fiscal year 2024 and projections for the remainder of fiscal year 2024 and fiscal years 2025 through 2027 (the “Financial Projections”). The Strategic Plan was provided to the Board in advance of the meeting. The Board, Kellanova management and representatives of Goldman Sachs discussed in detail the Financial Projections in the Strategic Plan (for additional information with respect to the financial projections, see the section of this proxy statement entitled “The Merger—Certain Unaudited Forecasted Financial Information”). Also at that meeting, representatives of Kirkland provided an overview of potential approaches to a market check, as well as a detailed discussion of key terms and conditions in the initial draft of the Merger Agreement provided by Mars, including the non-solicitation provision, efforts to obtain regulatory approvals, the

 

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circumstances in which Kellanova would be required to pay a termination fee to Mars, the circumstances in which Mars would be required to pay a reverse termination fee to Kellanova, the treatment of Kellanova’s employees, including with respect to outstanding Kellanova equity awards and covenants regarding employee benefits, and the voting agreements contemplated in the initial draft of the Merger Agreement that the Gund family and the Kellogg Foundation Trust would enter into concurrently with Kellanova’s and Mars’ entry into the Merger Agreement. Following discussion at that meeting, the Board determined that it did not support the July 23 Offer because it still undervalued Kellanova, but that the Board may be receptive to discussing a potential transaction at an increased valuation.

On July 26, 2024, the Board continued its regularly scheduled meeting. Members of Kellanova’s senior management and representatives of each of Goldman Sachs, Kirkland and Lazard were also in attendance. At that meeting, the Board further discussed the July 23 Offer, potential responses to Mars and the potential timeline for the proposed transaction. Also at that meeting, the Board discussed with Kellanova’s senior management and representatives of each of Goldman Sachs, Kirkland and Lazard the other potential counterparties that may be interested in pursuing a transaction to acquire Kellanova, the risks and benefits of conducting an outreach to potential counterparties, the likelihood that other potential counterparties could provide an offer that would be superior to the value likely to be obtained from Mars and the risks and uncertainties that each of those potential counterparties might face in pursuing an acquisition of Kellanova, including, among other things, in seeking regulatory approvals. The representatives of each of Kirkland and Goldman Sachs and the Board also discussed the possibility of an interloper emerging following execution of a transaction with Mars, the ability of the Board to engage with such an interloper if Kellanova were to pursue an acquisition transaction with Mars and the risk of Mars terminating its offer and discussions with Kellanova if Kellanova were to engage in discussions with other potential acquirors. Following discussion at that meeting, the Board determined that Kellanova should not contact other potential counterparties at such time and authorized Mr. Cahillane to convey the Board’s determination not to support the July 23 Offer to Mr. Weihrauch and to make a request to Mr. Weihrauch that Mars increase the valuation of Kellanova from its July 23 Offer, and to indicate that, if Mars provided a valuation closer to $85.00, Kellanova would be willing to engage in negotiations with Mars for an acquisition transaction reflecting such increased valuation.

Later on July 26, 2024, Mr. Cahillane called Mr. Weihrauch to convey that the Board did not support the July 23 Offer, but that the Board would be willing to consider pursuing an acquisition transaction at a valuation closer to $85.00 per share of Common Stock in cash. Mr. Weihrauch told Mr. Cahillane that Mars would not provide an offer at $85.00 per share, and that Mars would terminate its discussions with Kellanova regarding the potential acquisition transaction and pursue other strategic alternatives that Mars had already identified rather than transact at that valuation. Mr. Weihrauch indicated that he would discuss this matter further with the broader Mars team.

On July 30, 2024, Mr. Weihrauch called Mr. Cahillane and verbally offered, on behalf of Mars, to acquire all of the issued and outstanding shares of Kellanova for $83.50 per share in cash (the “July 30 Offer”). Also on July 30, 2024, Mr. Cahillane called Mr. Weihrauch and confirmed that the Board would proceed on the basis of the July 30 Offer, subject to negotiation of a definitive agreement and final approval by the Board.

Later on July 30, 2024, representatives of Kirkland sent Skadden an initial draft of a separate “clean team” agreement, pursuant to which it was agreed that certain information of Kellanova would only be shared with a specified subset of the representatives of Mars and under supervision of outside legal counsel. Kellanova and Mars executed the clean team agreement on August 3, 2024.

On July 31, 2024, representatives of each of Kirkland and Skadden held a virtual meeting to discuss, among other things, the scope and requirements of Mars’ remaining due diligence investigation. Representatives of Citi sent Goldman Sachs a list of due diligence information requests. From July 31, 2024 through the date of the Merger Agreement, Mars and its advisors were provided with additional due diligence information regarding Kellanova in the virtual data room.

 

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Also on July 31, 2024, representatives of Skadden sent Kirkland an initial draft of the voting agreement to be entered into by the Gund family and the Kellogg Foundation Trust concurrently with Kellanova’s and Mars’ entry into the Merger Agreement.

On August 2, 2024, following discussions with Kellanova’s management, as authorized by Mr. Cahillane, on key provisions and issues in the initial draft Merger Agreement, representatives of Kirkland sent Skadden a revised draft of the Merger Agreement which, among other things, contemplated that a monthly ticking fee would be payable by Mars in the event that the proposed transaction did not close by the end of 2024, that Kellanova would be permitted to declare and pay regular quarterly cash dividends on its Common Stock, that a lower termination fee would be payable by Kellanova if Kellanova were to terminate the Merger Agreement to accept a superior proposal within thirty days of the execution of the Merger Agreement, provided specific deadlines by which both Mars and Kellanova would need to make any regulatory filings and proposed that Mars and Kellanova would jointly control the strategy and decision making with respect to obtaining required regulatory approvals.

On August 3, 2024, representatives of Lazard submitted a relationship disclosure letter, which was dated as of August 3, 2024, to representatives of Kirkland, who shared the relationship disclosure letter with Kellanova on August 3, 2024, who then subsequently submitted the relationship disclosure letter to the Board on August 13, 2024.

On August 4, 2024, the Board formally engaged Lazard as Kellanova’s financial advisor, in addition to Goldman Sachs, in connection with a potential acquisition transaction. The Board selected Lazard as its financial advisor based on Lazard’s qualifications, expertise and reputation and its familiarity with and knowledge of the industries in which Kellanova operates.

Also on August 4, 2024, Reuters published an article reporting that Mars was exploring a potential acquisition of Kellanova (the “August 4 Reuters Article”). The August 4 Reuters Article did not speculate on the consideration to be paid to holders of Common Stock.

On August 5, 2024, representatives of Skadden sent Kirkland a revised draft of the Merger Agreement which, among other things, removed each of the monthly ticking fee, the two-tier termination fee, the specific deadlines by which filings would need to be made for required regulatory approvals and the joint control over strategy and decision making with respect to obtaining required regulatory approval proposed in Kirkland’s August 2 draft, and proposed that Mars would have sole control over the strategy and decision making with respect to obtaining required regulatory approvals and a $900 million termination fee payable by Kellanova in certain circumstances and a $900 million termination fee payable by Mars in certain circumstances if regulatory approvals for the transaction are not received.

Between August 5, 2024 and August 9, 2024, a representative of Mars conducted in-person site visits at Kellanova’s facilities in Battle Creek, Michigan, Wyoming, Michigan, Grand Rapids, Michigan, Jackson, Tennessee, Kutno, Poland, and Wrexham, United Kingdom.

Between August 6, 2024 and August 8, 2024, representatives of Mars and its advisors participated in numerous diligence calls with members of Kellanova’s management and its advisors regarding business, tax, intellectual property, labor and employee and general legal matters.

On August 6, 2024, the members of the Board’s Compensation and Talent Management Committee (the “Compensation and Talent Management Committee”) held a special meeting by videoconference to discuss compensation related matters in connection with the potential transaction with Mars, with members of Kellanova senior management and representatives of Kirkland in attendance. The Compensation and Talent Management Committee provided guidance to the representatives of Kirkland on the various employee matters issues in the draft Merger Agreement and instructed Kellanova’s management and Kirkland to continue negotiating such terms.

 

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On August 7, 2024, representatives of Kirkland sent Cleary Gottlieb Steen & Hamilton LLP, counsel to the Kellogg Foundation Trust, the initial draft of the voting agreement.

On August 8, 2024, following discussions with Kellanova’s management on key issues raised in Skadden’s August 5 draft of the Merger Agreement, representatives of Kirkland sent Skadden a revised draft of the Merger Agreement which, among other things, reinserted each of the monthly ticking fee, the specific deadlines by which filings would need to be made for required regulatory approvals, and joint control over strategy and decision making with respect to obtaining required regulatory approvals and proposed a $600 million termination fee payable by Kellanova in certain circumstances and a $1.5 billion reverse termination fee payable by Mars in certain circumstances.

Also on August 8, 2024, Mr. Cahillane received an unsolicited call from the Chief Executive Officer of Party A, informing Mr. Cahillane that Party A was interested in pursuing an acquisition transaction with Kellanova. Mr. Cahillane informed the Chief Executive Officer of Party A that Party A should submit any offer it proposed to make to the Board as soon as possible. The Chief Executive Officer of Party A informed Mr. Cahillane that he would need to convene the board of directors of Party A and that he understood the timing. The Chief Executive Officer of Party A did not provide any further details on the potential acquisition transaction between Party A and Kellanova at that time and did not provide any indication of Party A’s views as to the value of Kellanova. On the same date, Mr. Cahillane informed the Board of the unsolicited call from Party A.

Also on August 8, 2024, representatives of Goldman Sachs received an unsolicited call from a member of senior management of Party B. The member of senior management of Party B indicated that Party B was interested in pursuing a strategic transaction with respect to certain parts of Kellanova’s business, but that it would not be interested in pursuing a transaction to acquire Kellanova at that time.

Also on August 8, 2024, representatives of Goldman Sachs received an unsolicited call from the President and Chief Executive Officer of Party C. The President and Chief Executive Officer of Party C expressed interest in Party C pursuing a strategic transaction with Kellanova, but that Party C would not be interested in pursuing an acquisition of the entirety of Kellanova. The President and Chief Executive Officer of Party C expressed interest in acquiring portions of Kellanova’s business in the event that Kellanova needed to divest assets in order to complete an acquisition transaction for the entirety of Kellanova’s business with another counterparty.

On the same date, representatives of Goldman Sachs informed the Board of the unsolicited calls from Party B and Party C.

On August 9, 2024, Mr. Cahillane and Mr. Weihrauch had a telephone conversation regarding the status of negotiations between the parties. In the course of this conversation, Mr. Cahillane informed Mr. Weihrauch that Kellanova had received inbound interest from another party potentially interested in exploring an acquisition of Kellanova. Later that day, representatives of Citi called representatives of Goldman Sachs and further discussed the inbound interest received by Kellanova regarding an acquisition transaction following the August 4 Reuters Article. The representatives of Citi indicated to representatives of Goldman Sachs that Mars would terminate negotiations of the potential transaction with Kellanova if Mars determined that such negotiations had slowed down as a result of Kellanova engaging with other potential acquirors.

Also on August 9, 2024, representatives of Skadden sent Kirkland a revised draft of the Merger Agreement. The draft, among other things, removed the monthly ticking fee, included a proposal that Mars would not be required to undertake divestitures of Kellanova assets that generated more than $500 million of revenue in the 12-month period ending as of December 31, 2023, provided that Mars would have sole control over strategy and decision making with respect to obtaining required regulatory approvals, and did not provide a proposal on the amount of the termination fee to be paid by Kellanova in certain circumstances or the reverse termination to be paid by Mars in certain circumstances. On August 10, 2024, representatives of Skadden conveyed that Mars’ position

 

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was that the termination fee to be paid by Kellanova in certain circumstances would be $900 million and that the reverse termination fee to be paid by Mars in certain circumstances would be $1.1 billion.

Also on August 9, 2024, representatives of Kirkland sent Mintz, Levin, Cohn, Ferris, Glovsky and Popeo, P.C., counsel to certain entities and trusts affiliated with the Gund family, the initial draft of the voting agreement.

Also on August 9, 2024, representatives of Simpson Thacher & Bartlett LLP (“Simpson Thacher”), debt financing counsel to Mars, sent Kirkland an initial draft of the Debt Commitment Letter.

On August 10, 2024, the Board held a special meeting by videoconference to discuss the status of negotiations with Mars. Representatives of each of Goldman Sachs, Kirkland and Lazard were also in attendance. At that meeting, the Board discussed the unsolicited outreach from Party A, Party B and Party C and determined that none of Party A, Party B or Party C would be reasonably likely or able to pursue an acquisition transaction with Kellanova at a valuation greater than the valuation offered by Mars and that any such acquisition transaction would likely involve greater regulatory uncertainty than an acquisition transaction with Mars. Also at that meeting, representatives of Kirkland delivered a presentation reviewing the Board’s duties and responsibilities in connection with the potential transaction with Mars, including, among other things, the fiduciary duties owed by the Board under Delaware law and other legal considerations and obligations applicable in acquisition transactions involving public companies. Also at that meeting, representatives of Kirkland delivered a comprehensive presentation on the status of the draft Merger Agreement, including on key provisions such as the regulatory efforts covenant and the details of the “Burdensome Condition” standard applicable to such regulatory efforts, the proposed outside date for the potential transaction, the termination fees payable by Mars or Kellanova in the various circumstances in which the Merger Agreement could be terminated, the instances in which Kellanova could terminate the Merger Agreement in response to an unsolicited superior proposal from another potential acquiror, the conditions to closing of the Merger, and employee matters, including the treatment of Kellanova’s equity awards and retention of key Kellanova employees. Following discussion regarding the open points in the Merger Agreement, the Board instructed management and Kellanova’s advisors to convey to Mars and its advisors the Board’s positions on these remaining issues, including that the Board believed a ticking fee was appropriate if closing did not occur in 2024, that Mars’ obligation to divest Kellanova assets should be subject to a $750 million cap, that the termination fee to be paid by Kellanova in certain circumstances should be $750 million and that the reverse termination fee to be paid by Mars in certain circumstances should be $1.3 billion. Also at that meeting, representatives of Goldman Sachs reviewed with the Board Goldman Sachs’s preliminary financial analysis of Kellanova. Also at that meeting, representatives of Lazard reviewed with the Board Lazard’s preliminary financial analysis of Kellanova.

Between August 10, 2024 and August 11, 2024, representatives of Kirkland and members of Kellanova’s management held several calls to discuss key open issues in Skadden’s August 9 draft of the Merger Agreement and Kellanova’s responses to such key issues. Following such discussions, on August 11, 2024, representatives of Kirkland sent representatives of Skadden a revised draft of the Merger Agreement. The revised draft of the Merger Agreement contemplated, among other things, (i) a monthly ticking fee payable in addition to the $83.50 per share of Common Stock for each month that elapsed after December 31, 2024 in which the closing of the Merger had not occurred, (ii) specific deadlines by which any required filings for any required regulatory approvals must be made, (iii) with respect to the “Burdensome Condition” standard, that Mars would not be required to divest Kellanova assets that generated more than $750 million of revenue in 12-month period ending as of December 31, 2023, (iv) a $750 million termination fee payable by Kellanova upon termination of the Merger Agreement in certain circumstances and a $1.3 billion reverse termination fee payable by Mars upon termination of the Merger Agreement in certain circumstances and (v) the treatment of Kellanova’s existing equity awards and changes to covenants providing for the maintenance of Kellanova employee benefits following the closing of the Merger.

Also on August 11, 2024, the Chief Executive Officer of Party A sent an e-mail to Mr. Cahillane indicating that Party A would not be able to meet the timeline that Mr. Cahillane expressed during the August 8 call. The Chief Executive Officer of Party A indicated that Party A would be able to offer a compelling proposal

 

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and requested access to due diligence information and additional time to convene Party A’s board of directors in order to submit a formal proposal.

Also on August 11, 2024, Mr. Weihrauch called Mr. Cahillane and inquired about Mr. Cahillane’s discussions with Party A with respect to a potential acquisition transaction. Mr. Cahillane informed Mr. Weihrauch that the Chief Executive Officer of Party A asked for additional time to submit a formal proposal and that in response to this request, Mr. Cahillane told the Chief Executive Officer of Party A that it would need to proceed on an expedited timeline if Party A desired to pursue an acquisition transaction with Kellanova. Mr. Cahillane reiterated Kellanova’s interest in pursuing an acquisition transaction with Mars and indicated that Kellanova’s advisors had relayed all of the Board’s key issues with the Merger Agreement to Mars’ advisors.

Also on August 11, 2024, representatives of Skadden sent Kirkland a revised draft of the Merger Agreement. Among other things, the revised draft of the Merger Agreement (i) removed the monthly ticking fee proposed in Kirkland’s August 11 draft of the Merger Agreement, (ii) removed the specific deadlines by which any required filings for any required regulatory approvals must be made as proposed in Kirkland’s August 11 draft, (iii) accepted the “Burdensome Condition” divestiture cap proposed in Kirkland’s August 11 draft, (iv) proposed an $850 million termination fee payable by Kellanova upon termination of the Merger Agreement in certain circumstances and a $1.2 billion reverse termination fee payable by Mars upon termination of the Merger Agreement in certain circumstances, (v) rejected the treatment of certain Kellanova equity awards as set forth in Kirkland’s August 11 draft and (vi) accepted most of the changes to certain covenants relating to employee benefits and compensation following the closing of the Merger.

Also on August 11, 2024, representatives of Simpson Thacher sent Kirkland a revised draft of the Debt Commitment Letter.

On August 12, 2024, representatives of each of Goldman Sachs and Kirkland and members of senior management of Kellanova held a virtual meeting to discuss Skadden’s August 11 draft of the Merger Agreement and the key open items in the draft Merger Agreement as well as Kellanova’s responses to the key open items. Following this discussion, on August 12, 2024, representatives of Kirkland sent Skadden an e-mail outlining Kellanova’s proposals on the remaining key open items in the Merger Agreement. This proposal (i) included a monthly ticking fee of $0.14 payable in addition to the $83.50 per share of Common Stock for each month that elapses after March 31, 2025 in which the closing of the Merger has not occurred, (ii) included an $800 million termination fee payable by Kellanova upon termination of the Merger Agreement in certain circumstances, (iii) included a $1.25 billion reverse termination fee payable by Mars upon termination of the Merger Agreement in certain circumstances, (iv) accepted Mars’ proposed treatment of certain Kellanova equity awards as set forth in Skadden’s August 11 draft of the Merger Agreement and (v) proposed the changes to covenants relating to employee benefits and compensation following the closing of the Merger that Skadden did not accept in Skadden’s August 11 draft of the Merger Agreement.

Also on August 12, 2024, representatives of Goldman Sachs communicated Kellanova’s proposal to Citi by e-mail. Representatives of Citi indicated to Goldman Sachs that Kellanova’s proposal had been conveyed to Mars’ board of directors during a meeting of Mars’ board of directors.

Also on August 12, 2024, representatives of Skadden sent Kirkland a counterproposal on the key open items in the draft Merger Agreement. This proposal, among other things, (i) rejected the monthly ticking fee proposed in Kellanova’s August 12 proposal, (ii) accepted the $800 million termination fee payable by Kellanova upon termination of the Merger Agreement in certain circumstances, and (iii) accepted the $1.25 billion reverse termination fee payable by Mars upon termination of the Merger Agreement in certain circumstances.

Also on August 12, 2024, Mr. Cahillane called Mr. Weihrauch to discuss the remaining open points in the draft Merger Agreement. Mr. Weihrauch indicated to Mr. Cahillane that Mars would not accept any form of a ticking fee. Thereafter, on August 12, 2024, Mr. Cahillane, representatives of each of Goldman Sachs and Kirkland and members of the senior management of Kellanova held a virtual meeting to discuss Mr. Cahillane’s earlier call with Mr. Weihrauch on the key open points in the draft Merger Agreement.

 

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Also on August 12, 2024, representatives of Skadden sent Kirkland a revised counterproposal. The counterproposal continued to reject the monthly ticking fee and accepted several of the remaining open employee-related matters.

Also on August 12, 2024, representatives of Simpson Thacher sent Kirkland a revised draft of the Debt Commitment Letter.

On August 13, 2024, Mr. Cahillane, representatives of each of Goldman Sachs and Kirkland, and members of the senior management of Kellanova held a virtual meeting to discuss Mars’ August 12 revised counterproposal on the key open points in the draft Merger Agreement. Mr. Cahillane noted that, based on his discussion with Mr. Weihrauch, Mars would not be willing to accept any form of a ticking fee and that Mr. Cahillane believed that the terms of Mars’ August 12 revised counterproposal were “best and final”. Following discussion, Mr. Cahillane authorized Kirkland to finalize the Merger Agreement with Skadden.

Also on August 13, 2024, representatives of Skadden and representatives of Kirkland held a virtual meeting to negotiate and finalize the open points in the draft Merger Agreement.

Also on August 13, 2024, representatives of Simpson Thacher sent Kirkland a revised draft of the Debt Commitment Letter.

Also on August 13, 2024, representatives of Kirkland sent representatives of Skadden a revised draft of the Merger Agreement following Kirkland’s discussions with Mr. Cahillane and members of senior management of Kellanova. The revised draft of the Merger Agreement removed the ticking fee and accepted the remaining open employee-related matters as contemplated in Mars’ August 12 revised counterproposal.

Also on August 13, 2024, the Board held a special meeting by videoconference. Members of Kellanova’s senior management and representatives of each of Goldman Sachs, Kirkland and Lazard were also in attendance. The proposed final form of the Merger Agreement was provided to the Board in advance of the meeting. At that meeting, Mr. Cahillane provided an update to the Board on his discussions with the Chief Executive Officer of Party A, and discussed, among other things, the risk of waiting for Party A to submit a proposal to acquire Kellanova given the message relayed by representatives of Citi to Goldman Sachs that Mars would terminate negotiations if Mars determined that Kellanova had slowed negotiations to engage other potential acquirors.

Also at that meeting, representatives of Kirkland provided an update on the final terms of the Merger Agreement, including a comprehensive review of the resolution of key open items, including, among other things, the removal of the proposed monthly ticking fee, the $800 million termination fee payable by Kellanova in certain circumstances, the $1.25 billion reverse termination fee payable by Mars in certain circumstances, the conditions to closing, and various employee matters.

Also at that meeting, representatives of Goldman Sachs reviewed with the Board its financial analysis of the Merger Consideration, and rendered its opinion to the Board to the effect that, as of August 13, 2024, and based upon and subject to the assumptions, limitations, qualifications and other matters considered as described in its opinion, the Merger Consideration to be paid to the holders of shares of Common Stock (other than shares owned (or held in treasury) by Kellanova, shares owned by any of Kellanova’s wholly owned subsidiaries, Mars, Acquiror or Merger Sub (or any other subsidiary of Mars) and shares for which a holder or beneficial owner properly demands appraisal of such shares pursuant to, and who complies in all respects with, Section 262 of the DGCL) pursuant to the Merger Agreement was fair from a financial point of view to such holders. Goldman Sachs’ opinion is more fully described in the section of this proxy statement entitled “The Merger—Opinions of Financial Advisors to Kellanova—Opinion of Goldman Sachs & Co. LLC.” Also at that meeting, representatives of Lazard reviewed with the Board its financial analysis of the Merger Consideration, and rendered its opinion to the Board to the effect that, as of August 13, 2024, and based on and subject to the various assumptions made, procedures followed, matters considered and qualifications and limitations on the review undertaken by Lazard in connection with its opinion, the Merger Consideration to be paid to the holders of shares of Common Stock (other than shares owned (or held in treasury) by Kellanova, shares owned by any of Kellanova’s wholly owned subsidiaries, Mars, Acquiror

 

45

or Merger Sub (or any other subsidiary of Mars) and shares for which a holder or beneficial owner properly demands appraisal of such shares pursuant to, and who complies in all respects with, Section 262 of the DGCL) in the Merger was fair, from a financial point of view, to such holders. Lazard’s opinion is more fully described in the section of this proxy statement entitled “The Merger—Opinions of Financial Advisors to Kellanova—Opinion of Lazard Frères & Co. LLC.”

Also at that meeting, following discussion and consideration of the Merger Agreement and the other transactions contemplated by the Merger Agreement (including the factors described in the section entitled “The Merger—Recommendation of the Board and Its Reasons for the Merger”), the members of the Board unanimously: (i) determined that the terms of the Merger Agreement and the transactions contemplated thereby, including the Merger, are fair to, and in the best interests of, Kellanova and Kellanova shareowners; (ii) determined that it is in the best interests of Kellanova and Kellanova shareowners, and declared it advisable, to enter into, and adopted, the Merger Agreement providing for the Merger, upon the terms and subject to the conditions set forth therein and in accordance with the applicable provisions of the DGCL; (iii) approved and authorized the execution and delivery of the Merger Agreement, the performance of Kellanova’s covenants and other obligations thereunder and the consummation of the Merger upon the terms and subject to the conditions set forth in the Merger Agreement; (iv) resolved to recommend that Kellanova shareowners vote in favor of the adoption of the Merger Agreement and the transactions contemplated thereby, including the Merger, in accordance with the DGCL and to include such recommendation in this proxy statement; and (v) directed that the adoption of the Merger Agreement be submitted for consideration by Kellanova shareowners at a meeting thereof.

Later that same night on August 13, 2024, Kellanova and Mars executed the Merger Agreement and Mars delivered an executed Debt Commitment Letter. Also that same night on August 13, 2024, Mars executed and delivered voting agreements with each of the Kellogg Foundation Trust and certain entities and trusts affiliated with the Gund family.

On the morning of August 14, 2024, prior to the commencement of trading of Common Stock on the NYSE, Kellanova and Mars issued a joint press release announcing the Merger.

Recommendation of the Board and Its Reasons for the Merger

In considering the recommendation of the Board with respect to the Merger Proposal, you should be aware that our directors and executive officers have interests in the Merger that may be different from, or in addition to, yours. The Board was aware of and considered these interests, among other matters, in evaluating and negotiating the Merger Agreement and the Merger, and in recommending that the Merger Proposal be approved by the Kellanova shareowners. See the section entitled “The Merger—Interests of Kellanova’s Directors and Executive Officers in the Merger” beginning on page 71.

By unanimous vote, the Board, at a special meeting held on August 13, 2024 and after careful consideration at this and prior Board meetings, among other things:

 

•

determined that the terms of the Merger Agreement and the transactions contemplated thereby, including the Merger, are fair to, and in the best interests of, Kellanova and Kellanova shareowners;

 

•

determined that it is in the best interests of Kellanova and Kellanova shareowners, and declared it advisable, to enter into, and adopted, the Merger Agreement providing for the Merger, upon the terms and subject to the conditions set forth therein and in accordance with the applicable provisions of the DGCL;

 

•

approved and authorized the execution and delivery of the Merger Agreement, the performance of Kellanova’s covenants and other obligations thereunder and the consummation of the Merger upon the terms and subject to the conditions set forth in the Merger Agreement;

 

•

resolved to recommend that Kellanova shareowners vote in favor of the adoption of the Merger Agreement and the transactions contemplated thereby, including the Merger, in accordance with the DGCL and to include such recommendation in this proxy statement; and

 

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•

directed that the adoption of the Merger Agreement be submitted for consideration by Kellanova shareowners at a meeting thereof.

Accordingly, the Board unanimously recommends that Kellanova shareowners vote “FOR” the Merger Proposal at the Special Meeting.

In reaching its determination and recommendation, the Board consulted with representatives of Kellanova management, its legal advisor, Kirkland, and its financial advisors, Goldman Sachs and Lazard, as further described in the section entitled “The Mergers—Background of the Merger”. The Board considered a number of factors when evaluating the Merger Agreement. The Board considered these factors as a whole and without assigning relative weights to each such factor, and overall considered the relevant factors to be favorable to, and in support of, its determinations and recommendations with respect to the Merger Agreement. The factors supporting the Board’s determination and recommendation included (which factors are not necessarily presented in order of relative importance):

 

•

the current and historical market prices, volatility and trading information with respect to shares of Common Stock, including the fact that the Merger Consideration of $83.50 per share to be received by Kellanova shareowners in the Merger represents a premium of:

 

•

approximately 33% over the closing price per share as of August 2, 2024, the last full trading day prior to Reuters’ published article reporting that Mars was exploring an acquisition of Kellanova (the “Unaffected Date”);

 

•

approximately 33% over the highest closing per share price for the 52-week trading period prior to the Unaffected Date;

 

•

approximately 44% over the 30-day trading period volume weighted average price (“VWAP”) prior to the Unaffected Date;

 

•

approximately 42% over the 90-day trading period VWAP prior to the Unaffected Date;

 

•

the current and prospective business environment in which Kellanova operates, including economic, market and industry conditions generally, the current competitive environment in the snack food industry, and the likely effect of these factors on Kellanova and the execution of Kellanova’s plans as a standalone public company;

 

•

the fact that the price of $83.50 per share in cash payable in the Merger provides certainty, immediate value and liquidity to Kellanova shareowners at a compelling value, while eliminating the risks, uncertainties and potentially longer timeline for realizing equivalent value from Kellanova continuing as a standalone company;

 

•

the belief that, if Kellanova did not enter into the Merger Agreement, there could be a considerable period of time before the trading price per share of Common Stock would reach and sustain the per share Merger Consideration of $83.50 (even assuming full realization of the management projections);

 

•

the belief that the potential values, benefits, risks and uncertainties facing Kellanova shareowners associated with possible strategic alternatives to the Merger (including possible alternative business combinations and scenarios involving the possibility of remaining a standalone publicly traded company), and the timing, risks and likelihood of accomplishing such alternatives, taking into account the Board’s belief that there were likely no other potential strategic acquirors or other parties that would be reasonably likely to engage in a transaction in the near term at a price greater than the price being offered by Mars and that potential transactions with such other potential strategic acquirors or other parties would likely involve greater regulatory uncertainty than the Merger (including based on the inquiries from potential acquirors following the release of the Reuters article on August 4, 2024 speculating about a potential strategic transaction involving Kellanova, as more fully described under the section of this proxy statement entitled “The Merger—Background of the Merger”);

 

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•

the potential risk of losing the favorable opportunity with Mars in the event Kellanova pursued a higher price or in the event Kellanova sought to pursue discussions with other third parties who may be interested in pursuing a strategic transaction with Kellanova prior to entry into the Merger Agreement and the potential negative effect that such a process might have on Kellanova’s business;

 

•

the fact that, the Board and Kellanova’s senior management, in coordination with Kellanova’s outside legal and financial advisors, vigorously negotiated on an arms-length basis with Mars with respect to price and other terms and conditions in the Merger Agreement, resulting in an increase in Mars’ offer price per share from the beginning of the process to the end of the negotiations, and the belief that, after these negotiations, $83.50 per share of Common Stock was the highest price that Mars was willing to pay as of the date of execution of the Merger Agreement and the terms of the Merger Agreement include the most favorable terms to Kellanova, in the aggregate, to which Mars would be willing to agree and taken as a whole, and the fact that, the comprehensive terms of the Merger Agreement, including the respective representations, warranties, covenants and termination rights and fees of the parties, as finally negotiated, are reasonable and customary;

 

•

the financial analysis of the Merger Consideration reviewed by representatives of Goldman Sachs with the Board as well as the oral opinion of Goldman Sachs rendered to the Board on August 13, 2024, which was subsequently confirmed by delivery of a written opinion dated August 13, 2024, that, as of such date and based upon and subject to the assumptions, limitations, qualifications and other matters considered as described in its opinion, the Merger Consideration to be paid to the holders of shares of Common Stock (other than shares owned (or held in treasury) by Kellanova, shares owned by any of Kellanova’s wholly owned subsidiaries, Mars, Acquiror or Merger Sub (or any other subsidiary of Mars) and shares for which a holder or beneficial owner properly demands appraisal of such shares pursuant to, and who complies in all respects with, Section 262 of the DGCL) pursuant to the Merger Agreement was fair from a financial point of view to such holders, as more fully described under “The Merger—Opinions of Financial Advisors to Kellanova—Opinion of Goldman Sachs & Co. LLC”;

 

•

the financial analysis of the Merger Consideration reviewed by representatives of Lazard with the Board as well as the oral opinion of Lazard rendered to the Board on August 13, 2024, which was subsequently confirmed by delivery of a written opinion dated August 13, 2024, that, as of such date and based on and subject to the various assumptions made, procedures followed, matters considered and qualifications and limitations on the review undertaken by Lazard in connection with its opinion, the Merger Consideration to be paid to the holders of Common Stock (other than shares owned (or held in treasury) by Kellanova, shares owned by any of Kellanova’s wholly owned subsidiaries, Mars, Acquiror or Merger Sub (or any other subsidiary of Mars) and shares for which a holder or beneficial owner properly demands appraisal of such shares pursuant to, and who complies in all respects with, Section 262 of the DGCL) in the Merger was fair, from a financial point of view, to such holders, as more fully described under “The Merger—Opinions of Financial Advisors to Kellanova—Opinion of Lazard Frères & Co. LLC”;

 

•

the fact that Kellanova has sufficient operating flexibility under the terms of the Merger Agreement to conduct its business in the ordinary course prior to the consummation of the Merger;

 

•

the fact that the Merger Agreement permits Kellanova to continue to pay to its shareowners regular quarterly dividends during the pendency of the Merger, subject to certain maximum amounts per quarter;

 

•

the high degree of certainty that the Merger would close in a timely manner in light of the conditions and other terms set forth in the Merger Agreement, including the fact that the definition of “Company Material Adverse Effect” has a number of customary exceptions, Mars’ strong commitment to use its reasonable best efforts to promptly take all actions and do all things

 

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necessary to obtain all clearances, authorizations, consents, orders and approvals of all governmental entities necessary for the performance of its obligations pursuant to the Merger Agreement (subject to a Burdensome Condition standard, as more fully described under “The Merger Agreement—Other Covenants and Agreements—Efforts to Complete the Merger; Regulatory Approvals”), and the absence of a requirement for approval by Mars’ stockholders;

 

•

the commitment made by Mars to use its reasonable best efforts to avoid or eliminate impediments under any Antitrust Law or trade regulation law that may be asserted by any governmental entity so as to enable the parties to the Merger Agreement to close the Merger as promptly as practicable (subject to the specified thresholds and limitations of the Burdensome Condition standard set forth in the Merger Agreement), including a commitment to contest and defend through litigation any claim asserted in court by any governmental entity in order to avoid entry of, or have vacated or terminated, any decree, order or judgment that would prevent closing of the Merger;

 

•

the conditions to closing contained in the Merger Agreement, which are limited in number and scope, and which, in the case of the condition related to the accuracy of Kellanova’s representations and warranties, is generally subject to a Company Material Adverse Effect (as defined in the section of this proxy statement entitled “The Merger Agreement—Representations and Warranties”) qualification;

 

•

the ability of the Board to furnish information to, and conduct negotiations with, third parties in certain circumstances, and to terminate the Merger Agreement to accept a superior proposal upon payment of a termination fee of $800 million (which the Board believed was reasonable and customary under the circumstances and would not unduly deter any other party that might be interested in acquiring Kellanova);

 

•

the fact that, in the event the Merger Agreement is terminated prior to the consummation of the Merger in certain circumstances relating to (i) the failure to obtain required regulatory approvals and clearances, or (ii) the entry of, and continued effectiveness of, an order by a governmental entity or adoption or effectiveness of a law (in each case solely in respect of the HSR Act or any foreign investment law) that prohibits, enjoins or makes illegal the consummation of the Merger, or (iii) a Burdensome Condition that is a condition to receipt of any regulatory approval, or a regulatory approval containing, including or imposing a Burdensome Condition, or a law or order in effect at closing of the Merger resulting in a Burdensome Condition, Mars will be required to pay Kellanova a termination fee of $1.25 billion (which the Board believed was reasonable under the circumstances);

 

•

the Outside Date of August 13, 2025 (subject to two automatic 6-month extensions under certain circumstances), which the Board believed to be sufficient time to complete the Merger;

 

•

the availability of statutory appraisal rights to Kellanova shareowners who do not vote in favor of the adoption of the Merger Agreement and otherwise comply with all required procedures under Section 262 of the DGCL;

 

•

the fact that the consummation of the Merger is subject to the approval of Kellanova shareowners, who will have the opportunity to adopt or reject the Merger Agreement;

 

•

the fact that the Merger Agreement was unanimously approved by the Board, which is comprised of a majority of independent directors who are not employees of Kellanova or any of its subsidiaries, and which received advice from the Company’s outside financial and legal advisors in evaluating, negotiating and recommending the terms of the Merger Agreement;

 

•

the fact that the Merger is not subject to a financing condition and that Mars has represented that it or Acquiror will, as of the closing of the Merger, have available sufficient funds sufficient to pay the amounts required to be paid under the Merger Agreement;

 

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•

the guaranty of Acquiror’s and Merger Sub’s obligations under the Merger Agreement by Mars pursuant to the Merger Agreement, which provides substantial assurance that Acquiror and Merger Sub will perform their obligations under the Merger Agreement and increases closing certainty for Kellanova;

 

•

the fact that the Kellogg Foundation Trust, certain entities affiliated with G. Zachary Gund and certain trusts affiliated with the Gund family, who collectively held approximately 20.66% of the total outstanding shares of Common Stock as of August 13, 2024, agreed to enter into voting agreements to vote their shares in favor of the Merger;

 

•

the fact that the Merger does not require the approval of Mars’ stockholders, with the attendant risks associated with such vote;

 

•

Kellanova’s rights to seek specific performance of Mars’, Acquiror’s and Merger Sub’s obligations to cause the Merger to occur and to prevent other breaches of the Merger Agreement; and

 

•

the likelihood that the Merger would be consummated, in light of the experience, reputation and financial capabilities of Mars, including Mars’ prior track record of completing large and complex acquisitions.

In the course of its deliberations, the Board also considered and balanced against the potentially positive factors, a number of uncertainties, risks and other potentially negative factors, including, among other things, the following (which factors are not necessarily presented in order of relative importance):

 

•

the fact that Kellanova shareowners will not have the ability to participate in any future growth potential or benefit from any future increase in the value of Kellanova as, following the consummation of the Merger and the other transactions contemplated by the Merger Agreement, Kellanova will be a private company;

 

•

the possibility that all conditions to the Merger will not be timely satisfied or waived and that the Merger will not be consummated, and the potential negative effects on Kellanova’s business, operations, financial results and stock price;

 

•

the potential negative effects of the public announcement of the Merger on Kellanova’s sales, operating results, and stock price, its ability to retain key personnel, and its relationships with vendors, customers, and employees;

 

•

the restrictions on the conduct of Kellanova’s business prior to the completion of the Merger, requiring Kellanova to conduct its business in the ordinary course and preventing Kellanova from taking certain specified actions, subject to specific limitations, all of which may delay or prevent Kellanova from undertaking business opportunities pending completion of the Merger;

 

•

the fact that, subject to certain limited exceptions, during the term of the Merger Agreement, Kellanova is prohibited from soliciting any inquiry or proposal with respect to a competing proposal for Kellanova;

 

•

the costs involved in connection with entering into the Merger Agreement and completing the Merger (many of which are payable whether or not the Merger is consummated) and the time and effort of Kellanova management required to complete the Merger, which may disrupt its business operations and may have a negative effect on its financial results;

 

•

the conditions to the obligations of Acquiror to complete the Merger and the right of Acquiror to terminate the Merger Agreement under certain circumstances;

 

•

the risk that Kellanova shareowners may not approve the Merger;

 

•

the fact that completion of the Merger requires regulatory approvals, which could subject the Merger to delays and the risk that the required regulatory approvals may not be obtained at all;

 

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•

the fact that, in the event the Merger Agreement is terminated prior to the consummation of the Merger in certain circumstances relating to the failure of antitrust clearance to be obtained, Mars will be required to pay Kellanova a termination fee of $1.25 billion, which may not be sufficient to compensate Kellanova for losses suffered as a result of the termination of the Merger Agreement under such circumstances;

 

•

the risk of litigation arising from Kellanova shareowners in respect of the Merger Agreement or transactions contemplated by the Merger Agreement;

 

•

the fact that the Merger Consideration consists of cash and will generally be taxable for U.S. federal income tax purposes, as more fully described in the section entitled “The Merger—U.S. Federal Income Tax Considerations”;

 

•

the interests that certain Kellanova directors and executive officers may have with respect to the Merger, which interests may be different from, or in addition to their interests as Kellanova shareowners generally, as described in the section of this proxy statement entitled “The Merger—Interests of Kellanova’s Directors and Executive Officers in the Merger”; and

 

•

other risks and uncertainties of the nature identified in the section of this proxy statement captioned “Forward-Looking Statements” and in Kellanova’s filings with the SEC, including the risks set forth in “Item 1A. Risk Factors” in Kellanova’s Annual Report on Form 10-K for the year ended December 30, 2023. For more information, see the section of this proxy statement captioned “Where You Can Find More Information.”

After taking into account all of the factors set forth above, as well as others, the Board concluded that the risks, uncertainties, restrictions and potentially negative factors associated with the Merger Agreement and the transactions contemplated thereby were outweighed by the positive factors and potential benefits associated with the Merger Agreement and the transactions contemplated thereby that supported its determination and recommendation. Accordingly, the Board unanimously determined that it was fair to, and in the best interests of Kellanova and its shareowners to enter into the Merger Agreement.

The foregoing discussion of factors considered by the Board is not intended to be exhaustive, but is meant to include material factors considered by the Board. The Board collectively reached the conclusion to approve the Merger Agreement in light of the various factors described above and other factors that the members of the Board believed were appropriate. In light of the variety of factors considered in connection with its evaluation of the Merger, the Board did not find it practicable to, and did not, quantify or otherwise assign relative weights to the specific factors considered in reaching its determinations and recommendations. Moreover, each member of the Board applied his or her own personal business judgment to the process and may have given different weight to different factors. The Board did not undertake to make any specific determination as to whether any factor, or any particular aspect of any factor, supported or did not support its ultimate determination. The Board based its recommendation on the totality of the information available to it, including discussions with Kellanova’s senior management and outside legal and financial advisors. It should be noted that this explanation of the reasoning of the Board and certain information presented in this section is forward-looking in nature and should be read in light of the factors set forth in the section entitled “Cautionary Statement Concerning Forward-Looking Information” beginning on page 28. Accordingly, the Board unanimously recommends that Kellanova shareowners vote “FOR” the Merger Proposal.

Certain Unaudited Forecasted Financial Information

Although Kellanova historically has provided guidance as to its projected financial and operational results for its then-current fiscal year, Kellanova does not otherwise, as a matter of course, make long-term projections as to future performance available to the public, given, among other things, the inherent difficulty of predicting financial performance for future periods and the likelihood that the underlying assumptions and estimates may not be realized.

 

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As part of the Board’s regular process for evaluating Kellanova’s business, strategic and financial position, Kellanova management prepared a customary long-range plan that was presented to the Board. The long-range plan contains certain non-public, unaudited, stand-alone financial projections for Kellanova (the “Financial Projections”). The Financial Projections were authorized for use by Kellanova’s financial advisors for purposes of their financial analyses and opinions summarized under the sections of this proxy statement titled “The Merger—Opinions of Financial Advisors to Kellanova—Opinion of Goldman Sachs & Co. LLC” and “The Merger—Opinions of Financial Advisors to Kellanova—Opinion of Lazard Frères & Co. LLC.”

The Financial Projections were not prepared with a view toward public disclosure, and accordingly, do not necessarily comply with published guidelines of the SEC or the guidelines established by the American Institute of Certified Public Accountants for preparation and presentation of prospective financial information or generally accepted accounting principles (“GAAP”), and may not be prepared on a basis consistent with projections the Company has otherwise disclosed publicly. The Financial Projections included in this document have been prepared by, and are the responsibility of, Kellanova’s management. Kellanova’s independent auditor has not audited, reviewed, examined, compiled nor applied agreed-upon procedures with respect to the accompanying Financial Projections, and, accordingly, Kellanova’s independent auditor does not express an opinion or any other form of assurance with respect thereto. The PricewaterhouseCoopers LLP report incorporated by reference in this document relates to Kellanova’s previously issued financial statements. It does not extend to the Financial Projections and should not be read to do so.

The Financial Projections summarized below are included solely to provide Kellanova shareowners access to financial projections that were made available to the Board, Goldman Sachs and Lazard in connection with the proposed Merger, and are not included in this proxy statement to influence a Kellanova shareowner’s decision as to whether to vote to adopt the Merger Agreement or for any other purpose. None of Kellanova, the Board, Goldman Sachs, Lazard, Mars or any of their respective affiliates, advisors or other representatives makes any representation to any stockholder regarding the validity, reasonableness, accuracy or completeness of the Financial Projections or the ultimate performance of Kellanova relative to the Financial Projections. The inclusion of the summary of the Financial Projections in this proxy statement does not constitute an admission or representation of Kellanova, the Board, Goldman Sachs, Lazard, Mars or any of their respective affiliates, advisors or other representatives that the Financial Projections or the information contained therein are material. The inclusion of the summary of the Financial Projections in this proxy statement should not be regarded as an indication that Kellanova or anyone who receives the Financial Projections then considered, or now considers, the Financial Projections to be necessarily predictive of actual future events, and this information should not be relied upon as such. In the view of Kellanova’s management, the Financial Projections were prepared on a reasonable basis, reflected the best estimates and judgments available to Kellanova’s management at the time and presented, to the best of Kellanova’s management’s knowledge and belief, the expected course of action and Kellanova’s expected future financial performance as of the date such information was prepared.

The Financial Projections summarized below, while presented with numerical specificity, were based on numerous variables and assumptions that necessarily involve judgments with respect to, among other things, future economic, competitive, regulatory, financial market conditions, as well as matters specific to Kellanova’s business, in each case as of the date the Financial Projections were prepared, all of which are difficult or impossible to predict and many of which are beyond Kellanova’s control. In addition, the Financial Projections reflect assumptions that are subject to change and are susceptible to multiple interpretations based on actual results, revised prospects for Kellanova’s business, changes in general business or economic conditions, or any other transaction or event that has occurred or that may occur and that was not anticipated when the Financial Projections were prepared. Accordingly, actual results will differ, and may differ materially, from those contained in the Financial Projections, and therefore, the Financial Projections cannot be considered a guarantee of future operating results and should not be relied upon as such. The Financial Projections cover multiple years, and thus, by their nature, they become subject to greater uncertainty with each successive year.

 

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The Financial Projections include the following assumptions and estimates, and reflect the 53^rd week in Kellanova’s fiscal year 2025:

 

•

organic-basis net sales growth rates of nearly 4% in each fiscal year from 2025 through 2027;

 

•

adjusted operating profit growth rates of 8% in fiscal year 2025 (aided by the 53rd week), 5% in fiscal year 2026 and 7% in fiscal year 2027;

 

•

adjusted operating margins ranging from 15% in fiscal year 2025 to 16% in fiscal year 2027;

 

•

adjusted EBITDA margins ranging from 18% in fiscal year 2025 to 19% in fiscal year 2027;

 

•

adjusted earnings per share growth of 8% in fiscal year 2025, 7% in fiscal year 2026 and 9% in fiscal year 2027; and

 

•

free cash flow growth rates of 7% in fiscal year 2025, 8% in fiscal year 2026 and 7% in fiscal year 2027.

The Financial Projections assume no business expansions from mergers and acquisitions or alternative business models. In addition, the Financial Projections do not take into account any circumstances, transactions or events occurring after the date on which the Financial Projections were prepared and do not give effect to any changes or expenses incurred after the date on which they were made, including as a result of the Merger or any effects of the Merger (including any failure of the Merger to be completed).

Except as required by applicable securities laws, Kellanova does not intend to update or otherwise revise the Financial Projections to reflect circumstances existing after the date on which the Financial Projections were prepared or to reflect the occurrence of future events, even in the event that any or all of the underlying assumptions are shown to be in error. There can be no assurance that the financial results in the Financial Projections will be realized, or that future actual financial results will not materially vary from those estimated in the Financial Projections. In light of the foregoing, and the uncertainties inherent in the Financial Projections, Kellanova shareowners are cautioned not to place undue, if any, reliance on the Financial Projections. The Financial Projections should be evaluated, if at all, in conjunction with the historical financial statements and other information regarding Kellanova in its public filings with the SEC.

Important factors that may affect actual results and the achievability of the Financial Projections include, but are not limited to: regulatory actions at the federal, state and local level, changes in consumer food preferences or purchasing behaviors, general economic conditions, including foreign exchange rates, input cost inflation and disruptions in the financial, debt, capital, credit or securities markets; industry and market dynamics; competition; and those risks and uncertainties described in Kellanova’s Annual Report on Form 10-K for the fiscal year ended December 30, 2023 and subsequent quarterly reports on Form 10-Q and current reports on Form 8-K. See also the section entitled “Cautionary Statement Concerning Forward-Looking Information” in this proxy statement.

Certain of the measures included in the Financial Projections are financial measures that are not calculated in accordance with GAAP. Such non-GAAP financial measures should not be viewed as a substitute for GAAP financial measures, and may be different from non-GAAP financial measures used by other companies. Furthermore, there are limitations inherent in non-GAAP financial measures, because they exclude charges and credits that are required to be included in a GAAP presentation. Accordingly, non-GAAP financial measures should be considered together with, and not as an alternative to, financial measures prepared in accordance with GAAP. Financial measures provided to a financial advisor are excluded from the SEC’s rules concerning non-GAAP financial measures and, therefore, are not subject to SEC rules regarding disclosures of non-GAAP financial measures in disclosures relating to a proposed business combination such as the Merger if the disclosure is included in a document such as this proxy statement, which would otherwise require a reconciliation of a non-GAAP financial measure to a GAAP financial measure. Reconciliations of non-GAAP financial measures were not prepared or relied upon by the Board in connection with its

 

53

consideration of the Merger Agreement or by Goldman Sachs or Lazard for purposes of their financial analyses. Accordingly, Kellanova has not provided a reconciliation of any financial measures included in the Financial Projections.

The following table is a summary of the Financial Projections:

 

		Fiscal Year
($ in millions other than per share amounts)		2024E				2025E				2026E				2027E
Net Sales		$	12,782			$	13,366			$	13,670			$	14,098
Adjusted Operating Profit(1)		$	1,865			$	2,016			$	2,120			$	2,273
Adjusted EBITDA(1)		$	2,235			$	2,401			$	2,553			$	2,741
Adjusted Net Income(1)		$	1,281			$	1,361			$	1,439			$	1,550
Net Operating Profit After Tax		$	1,322			$	1,506			$	1,595			$	1,705
Free Cash Flow(2)		$	1,050			$	1,119			$	1,208			$	1,289
Unlevered Free Cash Flow(3)		$	1,102			$	1,348			$	1,359			$	1,533
Adjusted Earnings Per Share(1)		$	3.70			$	3.99			$	4.26			$	4.63

 

(1)

Adjusted Operating Profit, Adjusted Net Income and Adjusted Earnings Per Share are non-GAAP financial measures, each calculated in accordance with GAAP and adjusted to exclude the effect of restructuring programs, costs of the Spin Transaction, mark-to-market adjustments for pension plans (service cost, interest cost, expected return on plan assets, and other net periodic pension costs are not excluded), commodity contracts, certain equity investments and certain foreign currency contracts, a gain on interest rate swaps and other costs impacting comparability. Adjusted EBITDA is a non-GAAP financial measure which represents earnings before interest, taxes and depreciation and amortization and adjusted in the same manner described in the foregoing sentence.

(2)	Free Cash Flow is a non-GAAP financial measure, defined as net cash provided by operating activities reduced by expenditures for property additions.

(3)	Unlevered Free Cash Flow is a non-GAAP financial measure equal to Net Operating Profit After Tax plus depreciation & amortization, less capital expenditures, plus/minus the change in working capital and other balance sheet items, plus/minus other non-cash items.

Opinions of Financial Advisors to Kellanova

The Company engaged each of Goldman Sachs and Lazard to act as its financial advisors in connection with the Merger.

Opinion of Goldman Sachs & Co. LLC

At a special meeting of the Board held to evaluate the Merger, Goldman Sachs rendered its oral opinion, subsequently confirmed in writing by delivery of a written opinion dated August 13, 2024, that, as of such date and based upon and subject to the assumptions, limitations, qualifications and conditions described in Goldman Sachs’ written opinion, the Merger Consideration to be paid to the holders of Common Stock (other than shares owned (or held in treasury) by Kellanova, shares owned by any of Kellanova’s wholly owned subsidiaries, Mars, Acquiror or Merger Sub (or any other subsidiary of Mars) and shares for which a holder or beneficial owner properly demands appraisal of such shares pursuant to, and who complies in all respects with, Section 262 of the DGCL) pursuant to the Merger Agreement was fair from a financial point of view to such holders.

The full text of the written opinion of Goldman Sachs to the Board, which sets forth assumptions made, procedures followed, matters considered and limitations on the review undertaken by Goldman Sachs in rendering its opinion, is attached as Annex E to this proxy statement. The summary of Goldman Sachs’ opinion contained in this proxy statement is qualified in its entirety by reference to the full text of Goldman Sachs’ written opinion. Goldman Sachs’ advisory services and its opinion were provided for the

 

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information and assistance of the Board in connection with its consideration of the Merger and such opinion does not constitute a recommendation as to how any holder of Common Stock should vote with respect to the Merger, or any other matter.

In connection with rendering the opinion described above and performing its related financial analyses, Goldman Sachs reviewed, among other things:

 

•

the Merger Agreement;

 

•

annual reports to shareowners and Annual Reports on Form 10-K of Kellanova for the fiscal year ended December 30, 2023, December 31, 2022 and January 1, 2022, respectively;

 

•

the registration statement on Form 10, as amended, of WK Kellogg Co in connection with its spin-off from Kellanova;

 

•

certain interim reports to shareowners and Quarterly Reports on Form 10-Q of Kellanova;

 

•

certain other communications from Kellanova to its shareowners;

 

•

certain publicly available research analyst reports for Kellanova; and

 

•

certain internal financial analyses and forecasts for Kellanova prepared by its management (referred to as the “Financial Projections” and which are summarized in the section entitled “The Merger—Certain Unaudited Forecasted Financial Information” beginning on page 51), as approved for Goldman Sachs’ use by Kellanova.

Goldman Sachs also held discussions with members of the senior management of Kellanova regarding their assessment of the past and current business operations, financial condition and future prospects of Kellanova; reviewed the reported price and trading activity for Common Stock; compared certain financial and stock market information for Kellanova with similar information for certain other companies, the securities of which are publicly traded; reviewed the financial terms of certain recent business combinations in the food industry and in other industries; and performed such other studies and analyses, and considered such other factors, as it deemed appropriate.

For purposes of rendering its opinion, Goldman Sachs, with the consent of the Board, relied upon and assumed the accuracy and completeness of all of the financial, legal, regulatory, tax, accounting and other information provided to, discussed with or reviewed by, it, without assuming any responsibility for independent verification thereof. In that regard, Goldman Sachs assumed with the consent of the Board that the Projections were reasonably prepared on a basis reflecting the best then available estimates and judgments of the management of Kellanova. Goldman Sachs did not make an independent evaluation or appraisal of the assets and liabilities (including any contingent, derivative or other off-balance-sheet assets and liabilities) of Kellanova or any of its subsidiaries and it was not furnished with any such evaluation or appraisal. Goldman Sachs assumed that all governmental, regulatory or other consents and approvals necessary for the consummation of the Merger will be obtained without any adverse effect on the expected benefits of the Merger in any way meaningful to its analysis. Goldman Sachs also assumed that the Merger will be consummated on the terms set forth in the Merger Agreement, without the waiver or modification of any term or condition the effect of which would be in any way meaningful to its analysis.

Goldman Sachs’ opinion did not address the underlying business decision of Kellanova to engage in the Merger or the relative merits of the Merger as compared to any strategic alternatives that may be available to Kellanova; nor did it address any legal, regulatory, tax or accounting matters. Goldman Sachs’ opinion addressed only the fairness from a financial point of view to the holders of Common Stock (other than shares owned (or held in treasury) by Kellanova, shares owned by any of Kellanova’s wholly owned subsidiaries, Mars, Acquiror or Merger Sub (or any other subsidiary of Mars) and shares for which a holder or beneficial owner properly demands appraisal of such shares pursuant to, and who complies in all respects with, Section 262 of the DGCL),

 

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as of the date of its opinion, of the Merger Consideration to be paid to such holders pursuant to the Merger Agreement. Goldman Sachs did not express any view on, and its opinion did not address, any other term or aspect of the Merger Agreement or the Merger or any term or aspect of any other agreement or instrument contemplated by the Merger Agreement or entered into or amended in connection with the Merger, including the fairness of the Merger to, or any Merger Consideration received in connection therewith by, the holders of any other class of securities, creditors, or other constituencies of Kellanova; nor as to the fairness of the amount or nature of any compensation to be paid or payable to any of the officers, directors or employees of Kellanova, or class of such persons, in connection with the Merger, whether relative to the Merger Consideration to be paid to the holders of Common Stock (other than shares owned (or held in treasury) by Kellanova, shares owned by any of Kellanova’s wholly owned subsidiaries, Mars, Acquiror or Merger Sub (or any other subsidiary of Mars) and shares for which a holder or beneficial owner properly demands appraisal of such shares pursuant to, and who complies in all respects with, Section 262 of the DGCL) pursuant to the Merger Agreement or otherwise. Goldman Sachs did not express any opinion as to the prices at which Common Stock will trade at any time or as to the potential effects of volatility in the credit, financial and stock markets on Kellanova, Acquiror, Mars or the Merger, or as to the impact of the Merger on the solvency or viability of Kellanova, Acquiror or Mars or the ability of Kellanova, Acquiror or Mars to pay their respective obligations when they come due. Goldman Sachs’ opinion was necessarily based on economic, monetary, market and other conditions as in effect on, and the information made available to Goldman Sachs as of, the date of its opinion and Goldman Sachs assumed no responsibility for updating, revising or reaffirming its opinion based on circumstances, developments or events occurring after the date of its opinion. Goldman Sachs’ opinion was approved by a fairness committee of Goldman Sachs.

Summary of Financial Analysis

The following is a summary of the material financial analyses delivered by Goldman Sachs to the Board in connection with rendering the opinion described above. The following summary, however, does not purport to be a complete description of the financial analyses performed by Goldman Sachs, nor does the order of analyses described represent relative importance or weight given to those analyses by Goldman Sachs. Some of the summaries of the financial analyses include information presented in tabular format. The tables must be read together with the full text of each summary and are alone not a complete description of Goldman Sachs’ financial analyses. Except as otherwise noted, the following quantitative information, to the extent that it is based on market data, is based on market data as it existed on or before August 12, 2024, the last trading day before the date on which the Board approved the Merger, and is not necessarily indicative of current market conditions.

Implied Premia and Multiple Analyses

Goldman Sachs calculated the $83.50 in cash per share to be paid to the holders of shares of Common Stock pursuant to the Merger Agreement in relation to:

 

•

the closing price per share of Common Stock of $62.98 on August 2, 2024, the last trading day before media reports of a potential transaction with Mars became public;

 

•

the highest trading price for the shares of Common Stock of $62.98 over the 52-week period ended August 2, 2024 (the “52-week high”);

 

•

the volume weighted average price for the shares of Common Stock of $58.09 over the thirty-day period ended August 2, 2024 (the “30-day VWAP”); and

 

•

the volume weighted average price for the shares of Common Stock of $58.69 over the ninety-day period ended August 2, 2024 (the “90-day VWAP”).

 

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The results of these calculations are as follows:

 

Reference Price Per Share		Implied Premium Represented by $83.50 Per Share
Closing Price as of August 2, 2024 of $62.98			33	%
52-week high of $62.98 (undisturbed)			33	%
30-day VWAP of $58.09 (undisturbed)			44	%
90-day VWAP of $58.69 (undisturbed)			42	%

Goldman Sachs calculated the implied equity value of Kellanova by multiplying the $83.50 per share of Merger Consideration to be paid pursuant to the Merger Agreement by the number of fully diluted outstanding shares of Common Stock as of August 12, 2024, as provided by the management of Kellanova and approved for Goldman Sachs’ use by Kellanova, using the treasury stock method. Goldman Sachs then calculated the implied enterprise value for Kellanova by adding to Kellanova’s implied equity value the amount of Kellanova’s adjusted net debt (including financial net debt and adjustments for noncontrolling interest, investments in unconsolidated entities and factored receivables) as of June 30, 2024, as provided by the management of Kellanova and approved for Goldman Sachs’ use by Kellanova.

Using that information, Goldman Sachs calculated the following with respect to Kellanova:

 

•

Kellanova’s implied enterprise value as a multiple of the EBITDA of Kellanova for the twelve month period ended June 30, 2024, as provided by Kellanova’s management; and

 

•

Kellanova’s implied enterprise value as a multiple of the EBITDA of Kellanova for fiscal years 2024, 2025, and 2026, in each case as reflected in the Projections.

The results of these calculations were as follows:

 

		Multiples
Implied Enterprise Value as a Multiple of:
Q2 2024 LTM EBITDA			16.4x
FY2024E EBITDA			16.0x
FY2025E EBITDA			14.9x
FY2026E EBITDA			14.0x

Illustrative Discounted Cash Flow Analysis

Using the Projections, Goldman Sachs performed an illustrative discounted cash flow analysis on Kellanova to derive a range of illustrative equity values per share of Common Stock. Using the mid-year convention for discounting cash flows and discount rates ranging from 6.00% to 7.00%, reflecting estimates of Kellanova’s weighted average cost of capital, Goldman Sachs discounted to present value, as of June 30, 2024, (i) estimates of unlevered free cash flow for Kellanova for the period from July 1, 2024 to December 31, 2027, as reflected in the Projections, and (ii) a range of illustrative terminal values for Kellanova, which were calculated by applying a range of EV/LTM EBITDA multiples ranging from 12.0x to 14.0x, to an estimate of adjusted EBITDA to be generated by Kellanova in calendar year 2027, as reflected in the Projections (which analysis implied perpetuity growth rates ranging from 1.0% to 2.6%). The range of EV/LTM EBITDA multiples was estimated by Goldman Sachs utilizing its professional judgment and experience, taking into account historical trading multiples of Kellanova and certain publicly traded companies, as described below in the section captioned “Selected Publicly Traded Companies Trading Multiples.” Goldman Sachs derived such discount rates by application of the Capital Asset Pricing Model (“CAPM”), which requires certain company-specific inputs, including Kellanova’s target capital structure weightings, the cost of long-term debt, after-tax yield on permanent excess cash, if any, future applicable marginal cash tax rate and a beta for Kellanova, as well as certain financial metrics for the United States financial markets generally.

 

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Goldman Sachs derived a range of illustrative enterprise values for Kellanova by adding the ranges of present values it derived above. Goldman Sachs then subtracted from the range of illustrative enterprise values it derived for Kellanova the amount of Kellanova’s adjusted net debt (including financial net debt and adjustments for noncontrolling interest, investments in unconsolidated entities and factored receivables) as of June 30, 2024, as provided by the management of Kellanova and approved for Goldman Sachs’ use by Kellanova, to derive a range of illustrative equity values for Kellanova. Goldman Sachs then divided the range of illustrative equity values it derived by the number of fully diluted outstanding shares of Common Stock as of August 12, 2024, as provided by the management of Kellanova and approved for Goldman Sachs’ use by Kellanova, using the treasury stock method, to derive a range of illustrative equity values per share of Common Stock of $68.42 to $83.82.

Illustrative Present Value of Future Share Price Analysis

Using the Projections, Goldman Sachs performed an illustrative analysis of the implied present value of an illustrative future value per share of Common Stock. For this analysis, Goldman Sachs first calculated the implied enterprise value of Kellanova as of December 31 for each of the calendar years 2024 through 2026, by applying a range of illustrative EV/NTM EBITDA multiples of 11.5x to 14.5x to estimates of Kellanova’s one-year forward adjusted EBITDA as of December 31 for each of the calendar years 2024 through 2026, respectively. This illustrative range of EV/NTM EBITDA multiple estimates was derived by Goldman Sachs utilizing its professional judgment and experience, taking into account current and historical EV/NTM EBITDA multiples for Kellanova and certain publicly traded companies, as described below in the section captioned “Selected Publicly Traded Companies Trading Multiples.”

Goldman Sachs then subtracted the amount of Kellanova’s adjusted net debt (including financial net debt and adjustments for noncontrolling interest, investments in unconsolidated entities and factored receivables) as of June 30, 2024, as provided by the management of Kellanova and approved for Goldman Sachs’ use by Kellanova, from the respective implied enterprise values in order to derive a range of illustrative equity values for Kellanova as of December 31 for each of the calendar years 2024 through 2026. Goldman Sachs then divided these implied equity values by the projected year-end number of fully diluted outstanding shares of Common Stock for each of the calendar years 2024 through 2026, calculated using information provided by the management of Kellanova and approved for Goldman Sachs’ use by Kellanova, to derive a range of implied future values per share of Common Stock (excluding dividends). Goldman Sachs then added the cumulative dividends per Common Stock expected to be paid to holders of Common Stock through the end of each of calendar years 2024 through 2026, using the Projections, to derive a range of implied future values per share of Common Stock (including dividends). By applying an illustrative discount rate of 6.9%, reflecting an estimate of Kellanova’s cost of equity, and using a mid-year convention, Goldman Sachs discounted to present value as of June 30, 2024 both the theoretical future values per share of Common Stock it derived for Kellanova and the estimated dividends to be paid per share of Common Stock through the end of each of calendar years 2024 through 2026. Goldman Sachs derived such discount rate by application of the CAPM, which requires certain company-specific inputs, including a beta for Kellanova, as well as certain financial metrics for the United States financial markets generally. This analysis resulted in a range of implied equity values per share of Common Stock of $60.93 to $90.01.

Premia Paid Analysis

Goldman Sachs reviewed and analyzed, using publicly available information, the acquisition premia paid in selected all-cash or cash-and-stock acquisition transaction announced during the period from January 1, 2008 through August 12, 2024 involving U.S. publicly traded target companies with a transaction value equal to or greater than $20 billion where the buyer is not a financial buyer. Using publicly available information, Goldman Sachs calculated the median, 25^th percentile and 75^th percentile average premia of the price paid in the observed transactions relative to the target’s last undisturbed closing share price prior to announcement of the

 

58

respective transaction and the target’s 52-week high closing share price. The following table presents the results of this analysis:

 

Precedent Premia Paid		Undisturbed Share Price				52-Week High Share Price
Median			27	%			13	%
25th Percentile			14	%			7	%
75th Percentile			32	%			23	%

Based on Goldman Sachs’ review of the foregoing data and its professional judgment and experience, Goldman Sachs applied (i) with respect to the precedent premia paid relative to undisturbed share price, a reference range of illustrative premia of 14% to 32%, and (ii) with respect to the precedent premia paid relative to 52-week high share price, a reference range of illustrative premia of 7% to 23%, in each case to the undisturbed and 52-week high closing price of Common Stock on August 2, 2024 of $62.98. This analysis resulted in a range of implied equity values per share of Common Stock of (i) with respect to the precedent premia paid relative to undisturbed share price, $71.80 to $83.13, and (ii) with respect to the precedent premia paid relative to 52-week high share price, $67.39 to $77.47.

Precedent Transaction Multiples

Goldman Sachs analyzed certain publicly available information relating to the following selected transactions in the food industry since 2008. For each of the selected transactions where information was publicly available, Goldman Sachs calculated and compared the implied EV/FY1 (or next fiscal year) EBITDA of the applicable target company based on the total Merger Consideration paid in the transaction as a multiple of the target company’s FY1 EBITDA based on the closest available broker estimate at the time each such selected transaction was announced. While none of the companies that participated in the selected transactions are directly comparable to Kellanova, the companies that participated in the selected transactions are companies with operations that, for the purposes of analysis, may be considered similar to certain of Kellanova’s results, industry size and product profile.

The following table presents the results of this analysis:

 

Food Selected Precedent Transactions
Announcement Date		Target		Acquiror		EV/FY1 EBITDA
Sept 2023		Hostess Brands, Inc.		J. M. Smucker Co.		17.2x
June 2018		Pinnacle Foods		Conagra Brands, Inc.		15.9x
Dec 2017		Snyder’s-Lance, Inc.		Campbell Soup Company		19.6x
Sept 2017		Bob Evans Farms, Inc.		Post Holdings, Inc.		15.1x
Feb 2017		Mead Johnson Nutrition Company		Reckitt Benckiser Group plc		18.9x
July 2016		The WhiteWave Foods Co.		Danone S.A.		21.5x
Mar 2015		Kraft Foods Group		H.J. Heinz Holding Corporation		15.5x
July 2014		The Hillshire Brands Company		Tyson Foods, Inc.		16.2x
Feb 2013		H.J. Heinz Company		Berkshire Hathaway and 3G Capital		13.4x

 

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Food Selected Precedent Transactions
Announcement Date		Target		Acquiror		EV/FY1 EBITDA
Jan 2010		Cadbury plc		Kraft Foods Group		12.1x
Apr 2008		Wm. Wrigley Jr. Company		Mars, Incorporated		17.6x
Median						16.2x

Based on the results of the foregoing calculations and Goldman Sachs’ analyses of the various transactions and its professional judgment and experience, Goldman Sachs selected a reference range of EV/FY1 EBITDA multiples of 12.1x to 21.5x and applied such range to Kellanova’s FY1 EBITDA, as provided by the management of Kellanova, to derive a range of implied enterprise values for Kellanova. Goldman Sachs then subtracted from the range of implied enterprise values the amount of Kellanova’s adjusted net debt (including financial net debt and adjustments for noncontrolling interest, investments in unconsolidated entities and factored receivables) as of June 30, 2024, as provided by the management of Kellanova and approved for Goldman Sachs’ use by Kellanova, to derive a range of illustrative equity values for Kellanova. Goldman Sachs divided the results by the number of fully diluted outstanding shares of Common Stock as of August 12, 2024, as provided by the management of Kellanova and approved for Goldman Sachs’ use by Kellanova, using the treasury stock method, to derive a range of implied equity values per share of Common Stock of $58.81 to $118.63.

Selected Publicly Traded Companies Trading Multiples

For reference purposes only, Goldman Sachs reviewed and compared certain financial information of Kellanova to corresponding publicly available financial information and valuation multiples for the following publicly traded companies in the food industry, which are referred to in this section as the “selected companies”:

Snacking

 

•

The Hershey Company

 

•

Mondelēz International, Inc.

 

•

PepsiCo, Inc.

Center of Store

 

•

The Campbell Soup Company

 

•

Conagra Brands, Inc.

 

•

General Mills, Inc.

 

•

The J.M. Smucker Company

 

•

The Kraft Heinz Company

Although none of the selected companies are directly comparable to Kellanova, the selected companies were chosen because they are publicly traded companies in the food industry with certain operations or financial characteristics that, for purposes of analysis, may be considered similar to certain operations or financial characteristics of Kellanova.

Goldman Sachs also calculated and compared various financial multiples and ratios based on financial and trading data as of August 12, 2024, using information Goldman Sachs obtained from public filings. With respect to the selected companies, Goldman Sachs calculated among other metrics, EV/NTM EBITDA multiples.

 

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The results of these calculations are summarized as follows:

 

Selected Companies		EV /NTM EBITDA Multiple
Median – Snacking			14.8x
Median – Center of Store			9.9x

General

The preparation of a fairness opinion is a complex process and is not necessarily susceptible to partial analysis or summary description. Selecting portions of the analyses or of the summary set forth above, without considering the analyses as a whole, could create an incomplete view of the processes underlying Goldman Sachs’ opinion. In arriving at its fairness determination, Goldman Sachs considered the results of all of its analyses and did not attribute any particular weight to any factor or analysis considered by it. Rather, Goldman Sachs made its determination as to fairness on the basis of its experience and professional judgment after considering the results of all of its analyses. No company or transaction used in the above analyses as a comparison is directly comparable to Kellanova or the Merger.

Goldman Sachs prepared these analyses for purposes of providing its opinion to the Board as to the fairness from a financial point of view of the Merger Consideration to be paid to the holders of Common Stock (other than shares owned (or held in treasury) by Kellanova, shares owned by any of Kellanova’s wholly owned subsidiaries, Mars, Acquiror or Merger Sub (or any other subsidiary of Mars) and shares for which a holder or beneficial owner properly demands appraisal of such shares pursuant to, and who complies in all respects with, Section 262 of the DGCL). These analyses do not purport to be appraisals nor do they necessarily reflect the prices at which businesses or securities actually may be sold. Analyses based upon forecasts of future results are not necessarily indicative of actual future results, which may be significantly more or less favorable than suggested by these analyses. Because these analyses are inherently subject to uncertainty, being based upon numerous factors or events beyond the control of the parties or their respective advisors, none of Kellanova, Mars, Acquiror, Goldman Sachs or any other person assumes responsibility if future results are materially different from those forecast.

The Merger Consideration was determined through arm’s-length negotiations between Kellanova and Mars and was approved by the Board. Goldman Sachs provided advice to Kellanova during these negotiations. Goldman Sachs did not, however, recommend any specific amount of consideration to Kellanova or the Board or that any specific amount of consideration constituted the only appropriate consideration for the Merger.

As described above, Goldman Sachs’ opinion to the Board was one of many factors taken into consideration by the Board in making its determination to approve the Merger Agreement. The foregoing summary does not purport to be a complete description of the analyses performed by Goldman Sachs in connection with the fairness opinion and is qualified in its entirety by reference to the written opinion of Goldman Sachs attached as Annex E.

Goldman Sachs and its affiliates are engaged in advisory, underwriting, lending and financing, principal investing, sales and trading, research, investment management and other financial and non-financial activities and services for various persons and entities. Goldman Sachs and its affiliates and employees, and funds or other entities they manage or in which they invest or have other economic interests or with which they co-invest, may at any time purchase, sell, hold or vote long or short positions and investments in securities, derivatives, loans, commodities, currencies, credit default swaps and other financial instruments of Kellanova, Mars, affiliates of the Kellogg Foundation Trust, a significant shareowner of the Kellanova, any of their respective affiliates and third parties or any currency or commodity that may be involved in the Merger. Goldman Sachs acted as a financial advisor to Kellanova in connection with, and participated in certain of the negotiations leading to, the Merger. Goldman Sachs has provided certain financial advisory and/or underwriting

 

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services to Kellanova and its affiliates from time to time for which Goldman Sachs Investment Banking has received, and may receive, compensation, including having acted as financial advisor to Kellanova in the spin-off of WK Kellogg Co from Kellanova completed on October 2, 2023. During the two-year period ended August 13, 2024, Goldman Sachs Investment Banking had not been engaged by Mars, Acquiror or their respective affiliates to provide financial advisory or underwriting services for which Goldman Sachs has recognized compensation. Goldman Sachs may also in the future provide financial advisory and/or underwriting services to Kellanova, Mars, the Kellogg Foundation Trust and their respective affiliates for which Goldman Sachs Investment Banking may receive compensation.

The Board selected Goldman Sachs as a financial advisor because it is an internationally recognized investment banking firm that has substantial experience in transactions similar to the Merger. Pursuant to a letter agreement dated July 17, 2024, Kellanova engaged Goldman Sachs to act as a financial advisor in connection with its review of strategic alternatives, including with respect to the Merger. The engagement letter between Kellanova and Goldman Sachs provides for a transaction fee of approximately $93.2 million upon the completion of the Merger, $5 million of which was payable upon the announcement of the Merger. In addition, Kellanova has agreed to reimburse Goldman Sachs for certain of its expenses, including attorneys’ fees and disbursements, and to indemnify Goldman Sachs and related persons against various liabilities, including certain liabilities under the federal securities laws.

Opinion of Lazard Frères & Co. LLC

Kellanova retained Lazard as its financial advisor in connection with the Merger. In connection with Lazard’s engagement, Kellanova requested that Lazard evaluate the fairness, from a financial point of view, to holders of Common Stock (other than shares owned (or held in treasury) by Kellanova, shares owned by any of Kellanova’s wholly owned subsidiaries, Mars, Acquiror or Merger Sub (or any other subsidiary of Mars) and shares for which a holder properly demands appraisal of such shares pursuant to, and who complies in all respects with, Section 262 of the DGCL), of the Merger Consideration to be paid to such holders in the Merger. On August 13, 2024, at a meeting of the Board, Lazard rendered to the Board its oral opinion, which opinion was subsequently confirmed by delivery of a written opinion, dated August 13, 2024, to the effect that, as of such date, and based upon and subject to the various assumptions made, procedures followed, matters considered and qualifications and limitations on the review undertaken by Lazard in connection with its opinion, the Merger Consideration to be paid to holders of Common Stock (other than shares owned (or held in treasury) by Kellanova, shares owned by any of Kellanova’s wholly owned subsidiaries, Mars, Acquiror or Merger Sub (or any other subsidiary of Mars) and shares for which a holder or beneficial owner properly demands appraisal of such shares pursuant to, and who complies in all respects with, Section 262 of the DGCL) in the Merger was fair, from a financial point of view, to such holders.

The full text of Lazard’s written opinion, dated August 13, 2024, which describes the various assumptions made, procedures followed, matters considered, and qualifications and limitations on the review undertaken by Lazard in connection with its opinion, is attached as Annex F to this proxy statement and is incorporated herein by reference in its entirety. The summary of the written opinion of Lazard, dated August 13, 2024, set forth in this proxy statement is qualified in its entirety by reference to the full text of Lazard’s written opinion attached as Annex F. You are encouraged to read Lazard’s opinion and the summary contained in this proxy statement carefully and in their entirety. Lazard’s engagement and its opinion were for the benefit of the Board (in its capacity as such) and Lazard’s opinion was rendered to the Board in connection with its evaluation of the Merger and addressed only the fairness, as of the date of the opinion, from a financial point of view, to holders of Common Stock (other than shares owned (or held in treasury) by Kellanova, shares owned by any of Kellanova’s wholly owned subsidiaries, Mars, Acquiror or Merger Sub (or any other subsidiary of Mars) and shares for which a holder or beneficial owner properly demands appraisal of such shares pursuant to, and who complies in all respects with, Section 262 of the DGCL) of the Merger Consideration to be paid to such holders in the Merger. Lazard’s opinion did not address the relative merits of the Merger as

 

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compared to any other transaction or business strategy in which Kellanova might engage or the merits of the underlying decision by Kellanova to engage in the Merger. Lazard’s opinion is not intended to and does not constitute a recommendation to any shareowner as to how such shareowner should vote or act with respect to the Merger or any matter relating thereto.

In connection with its opinion, Lazard:

 

•

reviewed the financial terms and conditions of a draft, dated August 13, 2024, of the Merger Agreement;

 

•

reviewed certain publicly available historical business and financial information relating to Kellanova;

 

•

reviewed various financial forecasts and other data provided to Lazard by Kellanova relating to the business of Kellanova;

 

•

held discussions with members of the senior management of Kellanova with respect to the business and prospects of Kellanova;

 

•

reviewed public information with respect to certain other companies in lines of business Lazard believed to be generally relevant in evaluating the business of Kellanova;

 

•

reviewed the financial terms of certain business combinations involving companies in lines of business Lazard believed to be generally relevant in evaluating the business of Kellanova;

 

•

reviewed historical stock prices and trading volumes of Common Stock; and

 

•

conducted such other financial studies, analyses and investigations as Lazard deemed appropriate.

Lazard assumed and relied upon the accuracy and completeness of the foregoing information, without independent verification of such information. Lazard did not conduct any independent valuation or appraisal of any of the assets or liabilities (contingent or otherwise) of Kellanova or concerning the solvency or fair value of Kellanova, and Lazard was not furnished with any such valuation or appraisal. With respect to the financial forecasts utilized in Lazard’s analyses, Lazard assumed, with the consent of Kellanova, that they had been reasonably prepared on bases reflecting the best currently available estimates and judgments as to the future financial performance of Kellanova. Lazard assumed no responsibility for and expressed no view as to any such forecasts or the assumptions on which they are based.

Further, Lazard’s opinion was necessarily based on economic, monetary, market and other conditions as in effect on, and the information made available to Lazard as of, the date of its opinion. Lazard assumed no responsibility for updating or revising its opinion based on circumstances or events occurring after the date thereof. Lazard further noted that volatility in the credit, commodities and financial markets may have an effect on Kellanova or the Merger and Lazard did not express an opinion as to the effects of such volatility on Kellanova or the Merger. Lazard did not express any opinion as to the price at which shares of Common Stock may trade at any time subsequent to the announcement of the Merger. In connection with its engagement, Lazard was not authorized to, and did not, solicit indications of interest from third parties regarding a potential transaction with Kellanova. In addition, Lazard’s opinion did not address the relative merits of the Merger as compared to any other transaction or business strategy in which Kellanova might engage or the merits of the underlying decision by Kellanova to engage in the Merger.

In rendering its opinion, Lazard assumed, with the consent of Kellanova, that the Merger would be consummated on the terms described in the Merger Agreement, without any waiver or modification of any material terms or conditions. Representatives of Kellanova advised Lazard, and Lazard assumed, that the Merger Agreement, when executed, would conform to the draft reviewed by Lazard in all material respects. Lazard also assumed, with the consent of Kellanova, that obtaining the necessary governmental, regulatory or third party approvals and consents for the Merger would not have an adverse effect on Kellanova or the Merger. Lazard did

 

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not express any opinion as to any tax or other consequences that might result from the Merger, nor does Lazard’s opinion address any legal, tax, regulatory or accounting matters, as to which Lazard understood that Kellanova obtained such advice as it deemed necessary from qualified professionals. Lazard expressed no view or opinion as to any terms or other aspects (other than the Merger Consideration to the extent expressly specified in the opinion) of the Merger, including, without limitation, the form or structure of the Merger or any agreements or arrangements entered into in connection with, or contemplated by the Merger, including, without limitation, the Voting Agreements. In addition, Lazard expressed no view or opinion as to the fairness of the amount or nature of, or any other aspects relating to, the compensation to any officers, directors or employees of any parties to the Merger, or class of such persons, relative to the Merger Consideration or otherwise.

Summary of Lazard Financial Analysis

The following is a brief summary of the material financial analyses and reviews that Lazard deemed appropriate in connection with rendering its opinion. The summary of Lazard’s financial analyses and reviews provided below is not a complete description of the financial analyses and reviews underlying Lazard’s opinion. The preparation of a fairness opinion is a complex process involving various determinations as to the most appropriate and relevant methods of analysis and review and the application of those methods to particular circumstances, and, therefore, is not readily susceptible to summary description. Selecting portions of the financial analyses described below, without considering the financial analyses described below as a whole, could create an incomplete view of the financial analyses and reviews underlying Lazard’s opinion.

In arriving at its opinion, Lazard considered the results of its financial analyses and did not attribute any particular weight to any factor or financial analysis considered by it; rather, Lazard made its determination as to fairness on the basis of its experience and professional judgment after considering the results of all of its financial analyses. For purposes of its financial analyses and reviews, Lazard considered industry performance, general business, economic, market and financial conditions and other matters, many of which are beyond the control of Kellanova. No company, business or transaction used in Lazard’s financial analyses and reviewed as a comparison is identical to Kellanova, or the Merger and related transactions contemplated by the Merger Agreement, and an evaluation of the results of those financial analyses and reviews is not entirely mathematical.

Rather, the financial analyses and reviews involve complex considerations and judgments concerning financial and operating characteristics and other factors that could affect the Merger, public trading or other values of the companies, businesses or transactions used in Lazard’s financial analyses and reviews. The estimates contained in Lazard’s financial analyses and reviews and the ranges of values resulting from any particular financial analysis or review are not necessarily indicative of actual values or predictive of future results or values, which may be significantly more or less favorable than those suggested by Lazard’s financial analyses and reviews. In addition, financial analyses and reviews relating to the value of companies, businesses or securities do not purport to be appraisals or to reflect the prices at which companies, businesses or securities actually may be sold. Accordingly, the estimates used in, and the results derived from, Lazard’s financial analyses and reviews are inherently subject to substantial uncertainty.

The summary of the financial analyses and reviews provided below includes information presented in tabular format. In order to fully understand Lazard’s financial analyses and reviews, the tables must be read together with the full text of each summary. The tables alone do not constitute a complete description of Lazard’s financial analyses and reviews. Considering the data in the tables below without considering the full narrative description of the financial analyses and reviews, including the methodologies and assumptions underlying the financial analyses and reviews, could create a misleading or incomplete view of Lazard’s financial analyses and reviews.

Except as otherwise noted, the following quantitative information, to the extent that it is based on market data, is based on market data as it existed on or before August 12, 2024, the last trading day before the date of Lazard’s opinion, and is not necessarily indicative of current market conditions.

 

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Discounted Cash Flow Analysis

Using the Financial Projections, Lazard performed a discounted cash flow analysis of Kellanova.

A discounted cash flow analysis is a valuation methodology used to derive a valuation of a company by calculating the present value of the company’s estimated future cash flows. A company’s “estimated future cash flows” are its projected unlevered free cash flows, and “present value” refers to the value today or as of an assumed date of the future cash flows or amounts and is obtained by discounting the estimated future cash flows or amounts by a discount rate that takes into account macroeconomic assumptions and estimates of risk, the opportunity cost of capital, capital structure, income taxes, expected returns and other appropriate factors.

For purposes of this analysis, Lazard calculated a range of enterprise values for Kellanova by discounting to present value, utilizing discount rates ranging from 6.25% to 6.75%, chosen by Lazard based upon its analysis of the weighted average cost of capital of Kellanova (determined using the capital asset pricing model and based on considerations that Lazard deemed relevant in its professional judgment and experience, taking into account certain financial metrics, including capital structure, betas for a comparable group of companies and market risk) and using the mid-year convention, (i) the estimated after-tax unlevered free cash flows to be generated by Kellanova from June 30, 2024 through end of calendar year 2027; and (ii) a range of terminal values for Kellanova.

The terminal values were derived by applying a perpetuity growth rate range of 1.50% to 2.00% to the estimated unlevered free cash flow to be generated by Kellanova. The perpetuity growth rates were estimated by Lazard based on its professional judgment and experience, taking into account the Financial Projections.

Lazard then subtracted Kellanova’s net debt, factored accounts receivable, and noncontrolling interests, and added Kellanova’s investments in unconsolidated entities, in each case as of June 29, 2024 and based on information provided by Kellanova, to the range of enterprise values, to derive a range of total equity values for Kellanova. Lazard then calculated a range of implied equity values per share of Common Stock by dividing such total equity values of Kellanova by the number of fully diluted shares of Common Stock (determined using the treasury stock method), as calculated based on information provided by Kellanova with respect to dilutive securities outstanding as of August 12, 2024. The results of this analysis implied an equity value per share range of $69.60 to $79.10, rounded to the nearest $0.10.

Selected Publicly Traded Companies Analysis

Using public filings and data sources, Lazard reviewed and analyzed certain financial information, valuation multiple and market trading data related to selected publicly traded snacking and diversified grocery companies (referred to in this section as the “selected companies”), the operations of which Lazard believed, based on its professional judgment and experience, to be generally relevant for purposes of this analysis. Lazard compared such information for the selected companies to the corresponding information for Kellanova.

The selected companies for this analysis were as follows:

Snacking

 

•

PepsiCo, Inc.

 

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Mondelēz International, Inc.

 

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The Hershey Company

Diversified Grocery

 

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The Kraft Heinz Company

 

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•

General Mills, Inc.

 

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Conagra Brands, Inc.

 

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Campbell Soup Company

 

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The J.M. Smucker Company

 

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Post Holdings, Inc

None of the selected companies is directly comparable to Kellanova and certain of these companies may have characteristics that are materially different from those of Kellanova. Based on its professional judgment and experience, Lazard believes that purely quantitative analyses are not, in isolation, determinative in the context of the Merger and that qualitative judgments concerning differences between the business, financial and operating characteristics and prospects of Kellanova and the selected companies that could affect the public trading values of each company are also relevant.

For each of the selected companies, Lazard reviewed and compared, among other things, (i) the enterprise value of the selected company (defined as equity market capitalization plus total debt and factored accounts receivable, plus preferred equity and noncontrolling interest, less investments in unconsolidated entities, less cash and cash equivalents) as of August 12, 2024, as a multiple of such selected company’s estimated Adjusted EBITDA (defined as estimated earnings before interest, taxes, depreciation and amortization, adjusted, as applicable, for non-recurring items and any other adjustments, as appropriate), prepared by equity research analysts and compiled by FactSet, for calendar year 2025 and (ii) price per share as of August 12, 2024 as a multiple of Adjusted EPS (defined as diluted earnings per share, adjusted, as applicable, for non-recurring items and any other adjustments, as appropriate), prepared by equity research analysts and compiled by FactSet for calendar year 2025. The results of this analysis are summarized in the following table:

 

Benchmark		High		Low		Mean		Median
Snacking
2025E Adjusted EBITDA		14.9x		14.3x		14.5x		14.5x
2025E Adjusted EPS		21.1x		19.2x		19.9x		19.6x
Diversified Grocery
2025E Adjusted EBITDA		12.1x		9.1x		10.0x		9.4x
2025E Adjusted EPS		17.1x		10.8x		13.2x		12.9x

Based on its experience and professional judgment, after taking into account, among other things, such observed multiples, Lazard selected and applied a range of multiples of enterprise value / Adjusted EBITDA of 11.00x – 13.50x to Kellanova’s estimated Adjusted EBITDA for 2025, based on the Financial Projections. Based on this range of implied enterprise values and Kellanova’s net debt, factored accounts receivable, investments in unconsolidated entities and noncontrolling interests, in each case as of June 29, 2024 and based on information provided by Kellanova, and the number of fully diluted outstanding shares of Common Stock (determined using the treasury stock method), based on information provided by Kellanova with respect to dilutive securities outstanding as of August 12, 2024,this analysis indicated an equity value reference range per share of $57.20 to $73.80, rounded to the nearest $0.10. In addition, based on its experience and professional judgment, after taking into account, among other things, such observed multiples, Lazard selected and applied a range of multiples of price / Adjusted EPS of 14.00x – 19.00x to Kellanova’s estimated Adjusted EPS for fiscal year 2025, based on the Financial Projections. This analysis indicated an equity value reference range per share of $55.90 to $75.70, rounded to the nearest $0.10.

 

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Selected Precedent Transactions Analysis

Using public filings and other publicly available information, Lazard reviewed and analyzed selected precedent transactions that Lazard viewed as generally relevant in evaluating the Merger. In performing these analyses, Lazard analyzed certain financial information and transaction multiples relating to companies in the selected transactions and compared such information to the corresponding information for the Merger.

Specifically, Lazard reviewed eleven acquisition transactions in the food industry announced since July 2014, that Lazard believed, based on its experience and its professional judgment, to be generally relevant for the purpose of this analysis. These transactions are listed below.

 

Announcement Date		Acquiror		Target
September 2023		The J.M. Smucker Company		Hostess Brands, Inc.
August 2023		Campbell Soup Company		Sovos Brands, Inc.
April 2021		Nestlé S.A.		The Bountiful Company
February 2021		Hormel Foods Corporation		Planters® (snacking portfolio of The Kraft Heinz Company)
June 2018		Conagra Brands, Inc.		Pinnacle Foods Inc.
December 2017		Campbell Soup Company		Snyder’s-Lance, Inc.
December 2017		KKR		Unilever Spreads business
July 2017		McCormick & Company Inc.		Reckitt Benckiser Group plc’s Food Division
December 2015		JAB Holding Company / Mondelēz International, Inc.		Keurig Green Mountain
March 2015		H.J. Heinz Company		Kraft Foods Group, Inc.
July 2014		Tyson Foods, Inc.		The Hillshire Brands Company

None of the target companies in the selected transactions is directly comparable to Kellanova and none of the selected transactions is directly comparable to the Merger, and certain of these selected transactions and target companies may have characteristics that are materially different from those of the Merger and Kellanova. Based on its professional judgment and experience, Lazard believes that purely quantitative analyses are not, in isolation, determinative in the context of the transaction and that qualitative judgments concerning differences between the terms of the Merger and the business, financial and operating characteristics and prospects of Kellanova and the selected transactions and target companies that could affect the transaction multiples and transaction values of each selected transaction and target company are also relevant.

For each of the selected transactions, Lazard calculated the transaction value (defined as the target company’s implied equity value based on the consideration paid in the applicable transaction plus total debt and factored accounts receivable, plus preferred equity and noncontrolling interest, less investments in unconsolidated entities, less cash and cash equivalents), based on information in public filings, press releases and investor relations documents, as a multiple of the last twelve-month Adjusted EBITDA for the target company at the time of the announcement of the applicable transaction, which Lazard refers to as “LTM Adjusted EBITDA”.

 

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The financial data for the selected transactions and target companies were based on public filings and other publicly available information. The results of this analysis are summarized in the following table:

 

Benchmark		25th Percentile		Median		Mean		75th Percentile
EV / LTM Adjusted EBITDA		15.1x		16.7x		16.5x		18.9x

Based on its professional judgment after taking into account, among other things, such observed multiples for each of the selected transactions, Lazard selected an enterprise value / Adjusted LTM EBITDA multiple reference range of 15.50x – 17.50x and applied this multiple reference range to Kellanova’s estimated LTM Adjusted EBITDA as of June 29, 2024 and subtracted from it Kellanova’s net debt, factored accounts receivable, and noncontrolling interests, and added to it Kellanova’s investments in unconsolidated entities, in each case on June 29, 2024 and based on information provided by Kellanova, and divided by the number of fully diluted outstanding shares of Common Stock (determined using the treasury stock method), based on information provided by Kellanova with respect to dilutive securities outstanding as of August 12, 2024. The results of this analysis implied an equity value per share range of $78.10 to $90.20, rounded to the nearest $0.10.

Other Analysis

The analyses and data described below were presented to the Board for informational purposes only and did not provide the basis for, and were not otherwise material to, the rendering of Lazard’s opinion.

Premia Paid Analysis

Using information from public filings and other publicly available information, Lazard analyzed the premia paid for all-cash selected acquisitions of publicly-traded companies in the food industry announced since January 1, 2009 with a total enterprise value over $20 billion involving a U.S. target. For each of the precedent transactions, Lazard calculated the implied premia as a percentage based on the amount by which the per share consideration in each transaction exceeded the target company’s 20-day volume-weighted average price prior to the relevant transaction.

Based on its professional judgment and experience, Lazard then applied a range of per share price premia of approximately 20.00% to 35.00%, respectively, to the closing share price of Common Stock on August 2, 2024, the last trading day before press rumors of a potential transaction, of $62.98, to calculate an implied equity value per share range of $75.60 to $85.10, rounded to the nearest $0.10.

Research Analyst Price Targets

Lazard reviewed selected equity research analyst price targets based on published, publicly available Wall Street equity research reports. Lazard observed that such price targets ranged from $56.07 per share to $68.22 per share, discounted one year at Kellanova’s cost of equity of 7.0%.

Post-Separation High/Low Trading Prices

Lazard reviewed the range of trading prices of shares of Common Stock for the period since the completion of the separation of Kellanova’s North American cereal business, WK Kellogg Co, on October 2, 2023. Lazard observed that, during such period, the closing prices of the shares of Common Stock ranged from $48.62 per share to $62.98 per share.

 

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Miscellaneous

In connection with Lazard’s services as financial advisor to Kellanova in connection with the Merger, Kellanova agreed to pay Lazard a fee for such services of $10 million, payable upon the consummation of the Merger, of which $2 million became payable upon delivery of the fairness opinion. In addition, Kellanova has agreed to reimburse certain of Lazard’s expenses arising, and to indemnify Lazard against certain liabilities that may arise, out of Lazard’s engagement. In the two-year period prior to the date of Lazard’s opinion, other than this engagement, Lazard has not been engaged to provide financial advisory services to Kellanova. Lazard in the past has provided certain investment banking services to Mars, including, during in the two-year period prior to the date of Lazard’s opinion, having advised Mars with respect to certain acquisitions by Mars, for which Lazard has received compensation of approximately $17 million.

Lazard, as part of its investment banking business, is continually engaged in the valuation of businesses and their securities in connection with mergers and acquisitions, negotiated underwritings, secondary distributions of listed and unlisted securities, private placements, leveraged buyouts, and valuations for corporate and other purposes. In addition, in the ordinary course, Lazard and its affiliates and employees may trade securities of Kellanova, Mars and certain of their respective affiliates for their own accounts and for the accounts of their customers, may at any time hold a long or short position in such securities, and may also trade and hold securities on behalf of Kellanova, Mars and certain of their respective affiliates. The issuance of Lazard’s opinion was approved by the opinion committee of Lazard.

Kellanova and Mars determined the Merger Consideration through arm’s-length negotiations, and the Board approved such Merger Consideration. Lazard conducted the analyses and reviews summarized above for the purpose of providing an opinion to the Board as to the fairness, from a financial point of view, to holders of Common Stock (other than shares owned (or held in treasury) by Kellanova, shares owned by any of Kellanova’s wholly owned subsidiaries, Mars, Acquiror or Merger Sub (or any other subsidiary of Mars) and shares for which a holder or beneficial owner properly demands appraisal of such shares pursuant to, and who complies in all respects with, Section 262 of the DGCL), of the Merger Consideration to be paid to such holders. Lazard did not recommend any specific consideration to the Board or any other person or indicate that any given consideration constituted the only appropriate consideration for the Merger.

Lazard’s opinion was one of many factors considered by the Board, as discussed further in “—Recommendation of the Board and Its Reasons for the Merger.” Consequently, the summary of the analyses and reviews provided above should not be viewed as determinative of the opinion of the Board with respect to the Merger Consideration or of whether the Board would have been willing to recommend a different transaction or determine that a different consideration was fair.

Lazard is an internationally recognized investment banking firm providing a full range of financial advisory and other services. Lazard was selected to act as a financial advisor to the Board after considering Lazard’s qualifications, independence, expertise, international reputation, knowledge of the snacking and diversified grocery industries and experience acting as financial advisor in connection with similar partnership and strategic transactions.

Financing of the Merger

The Merger Agreement does not contain any financing-related closing condition. However, the Merger Agreement does require Acquiror and Mars to undertake to obtain financing on or prior to the Closing in an amount, when taken together with available cash on hand and other sources of funds available to Mars and Acquiror, to consummate the transactions. Acquiror obtained debt financing commitments for the Merger consisting of a bridge loan facility in an aggregate principal amount equal to $29,000,000,000, subject to certain customary mandatory commitment reductions, which will be available to Acquiror on the terms and subject to the conditions set forth in the Debt Commitment Letter. The obligations of the lenders to provide the debt financing under the Debt Commitment Letter are subject to a number of customary conditions.

 

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The Merger Agreement further provides that Kellanova will provide customary cooperation that may be reasonably requested for arranging, obtaining, syndicating and consummating the debt financing for the transaction (or any issuance, sale or offering of debt securities and/or delayed draw term loans, in each case, in lieu thereof as contemplated by the Debt Commitment Letter) or any exchange offer to exchange all or a portion of Kellanova’s outstanding notes for securities of Mars.

Certain Effects of the Merger

If the Merger Proposal receives the required approvals of Kellanova shareowners described elsewhere in this proxy statement and the other conditions to the Closing of the Merger are either satisfied or waived and the Merger Agreement is not otherwise terminated in accordance with its terms, Merger Sub will be merged with and into Kellanova upon the terms set forth in the Merger Agreement. As the Surviving Corporation in the Merger, Kellanova will continue to exist following the Merger as a wholly owned subsidiary of Acquiror.

Kellanova’s Restated Certificate of Incorporation, dated September 29, 2023, and as amended on April 29, 2024 (the “Certificate of Incorporation”) and the Bylaws will be amended and restated as a result of the Merger to the forms attached as Exhibit A and Exhibit B to Annex A to this proxy statement, respectively (collectively, the “Surviving Corporation Organizational Documents”), which include provisions with respect to exculpation, indemnification and advancement of expenses that are no less favorable to the Company Indemnified Parties (as defined in the section entitled “The Merger Agreement—Structure of the Merger; Certificate of Incorporation, Bylaws and Directors and Officers of the Surviving Corporation” beginning on page 83 with respect to acts or omissions occurring at or prior to the Effective Time as those contained in the Certificate of Incorporation and the Bylaws as of August 13, 2024).

Following the Merger, all Common Stock will be beneficially owned by Mars, and none of the holders of Common Stock as of immediately prior to the Merger will, by virtue of the Merger, have any ownership interest in, or be a shareowner of, Kellanova, the Surviving Corporation, Acquiror or Mars. As a result, the holders of Common Stock as of immediately prior to the Merger will no longer benefit from any increase in the value, nor will they bear the risk of any decrease in the value, of Common Stock. Following the Merger, Mars will benefit from any increase in Kellanova’s value and also will bear the risk of any decrease in Kellanova’s value.

At the Effective Time, each share of Common Stock issued and outstanding immediately prior to the Effective Time (other than shares of Common Stock owned (or held in treasury) by Kellanova, shares held, directly or indirectly, by Mars or any of its subsidiaries (including Acquiror and its subsidiaries) or any wholly owned subsidiary of Kellanova, immediately prior to the Effective Time, or shares held by a holder or beneficial owner who properly demands appraisal of such shares pursuant to, and who complies in all respects with, Section 262 of the DGCL), will be converted into the right to receive the Merger Consideration. Any shares of Common Stock held by Kellanova as treasury stock immediately prior to the Effective Time will automatically be cancelled and retired and not be entitled to receive the Merger Consideration, and any shares of Common Stock held, directly or indirectly, by Mars or any of its subsidiaries (including Acquiror and its subsidiaries), or any wholly owned subsidiary of Kellanova, immediately prior to the Effective Time will remain outstanding and will not be converted into the right to receive the Merger Consideration.

For information regarding the effects of the Merger on Kellanova’s outstanding equity awards and the ESPP, please see the sections entitled “The Merger Agreement —Treatment of Kellanova Incentive Awards—Treatment of Options,” “The Merger Agreement —Treatment of Kellanova Incentive Awards—Treatment of RSUs,” “The Merger Agreement—Treatment of Kellanova Incentive Awards—Treatment of PSUs,” “The Merger Agreement—Treatment of Kellanova Incentive Awards—Treatment of DSUs,” and “The Merger—Treatment of Kellanova Incentive Awards—Treatment of Employee Stock Purchase Plan.”

 

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The Common Stock is currently registered under the Exchange Act and trades on the NYSE under the symbol “K.” Following the consummation of the Merger, shares of Common Stock will no longer be traded on the NYSE or any other public market. In addition, the registration of the Common Stock under the Exchange Act will be terminated. Following termination of registration of the Common Stock under the Exchange Act, Kellanova will no longer be required to furnish information to the Kellanova shareowners and the SEC, and the provisions of the Exchange Act, such as the requirement to file annual and quarterly reports pursuant to Section 13(a) or 15(d) of the Exchange Act, the short-swing trading provisions of Section 16(b) of the Exchange Act and the requirement to furnish a proxy statement in connection with shareowners’ meetings pursuant to Section 14(a) of the Exchange Act, will become inapplicable to Kellanova. Mars will become the beneficiary of the cost savings associated with Kellanova no longer being subject to the reporting requirements under the federal securities laws.

Effects on Kellanova if the Merger Is Not Completed

In the event that the Merger Proposal does not receive the required approvals of Kellanova shareowners described elsewhere in this proxy statement, or if the Merger is not completed for any other reason, Kellanova’s shareowners will not receive any Merger Consideration or other payment for their shares of Common Stock in connection with the Merger. Instead, Kellanova expects that its management will operate Kellanova’s business in a manner similar to that in which it is being operated today and Kellanova will remain an independent public company, the Common Stock will continue to be listed and traded on the NYSE, Common Stock will continue to be registered under the Exchange Act and Kellanova shareowners will continue to own their shares of Common Stock and will continue to be subject to the same general risks and opportunities as they currently are with respect to ownership of Common Stock.

If the Merger is not completed, there can be no assurances as to the effect of these risks and opportunities on the future value of your shares of Common Stock, including the risk that the market price of Common Stock may decline to the extent that the current market price of Common Stock reflects a market assumption that the Merger will be completed. If the Merger is not completed, there can be no assurances that any other transaction acceptable to Kellanova will be offered or that the business, operations, financial condition, earnings or prospects of Kellanova will not be adversely impacted or that Kellanova shareowners will ever receive a control premium for their shares. Pursuant to the Merger Agreement, under certain circumstances Kellanova is permitted to terminate the Merger Agreement in order to enter into an alternative transaction. Please see the section entitled “The Merger Agreement—Termination.”

Under certain circumstances, if the Merger is not completed, Kellanova may be obligated to pay to Acquiror the Termination Fee. Please see the section entitled “The Merger Agreement—Termination Fee.”

Interests of Kellanova’s Directors and Executive Officers in the Merger

Kellanova’s directors and executive officers may have interests in the Merger that are in addition to, or different from, the interests of other shareowners, including the treatment of Options, RSUs, PSUs and DSUs, participation in the ESPP, certain severance benefits pursuant to the COC Severance Policy, potential gross-up payments to mitigate the impact of excise taxes imposed under Section 4999 of the Code, annual bonus payments under Kellanova’s Annual Incentive Plan (the “AIP”) and continued indemnification coverage. The Board was aware of these interests and considered them, among other matters, in evaluating and approving the Merger Agreement and the Merger, and in recommending the approval of the Merger Proposal and the Advisory Compensation Proposal to Kellanova shareowners. These interests are described in further detail below.

Treatment of Options

In connection with the completion of the Merger and subject to the terms of the Merger Agreement, at the Effective Time, each Option that is outstanding and unexercised as of immediately prior to the Effective

 

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Time, by virtue of the Merger, will cease to be outstanding and will be converted into the right to receive, in accordance with the terms of the Merger Agreement, an amount in cash, without interest, equal to the product of the total number of shares of Common Stock subject to such Option and the excess, if any, of the per share Merger Consideration over the per share exercise price of the Option. Any Option with a per share exercise price equal to or greater than the per share Merger Consideration will be cancelled as of the Effective Time without payment. All Options are currently fully vested.

Treatment of RSUs

In connection with the completion of the Merger and subject to the terms of the Merger Agreement, at the Effective Time, each RSU that is outstanding immediately prior to the Effective Time and that was granted prior to August 13, 2024 will be deemed fully vested and will cease to be outstanding and will be converted into the right to receive an amount in cash, without interest, equal to the sum of the product of such number of shares of Common Stock issuable pursuant to the RSU and the per share Merger Consideration, plus all dividend equivalents accrued or credited with respect to such RSU. At the Effective Time, each RSU that is outstanding immediately prior to the Effective Time and that was granted on or after August 13, 2024 will be cancelled and converted into a Converted RSU Cash Award equal to the per share Merger Consideration with respect to such RSU plus all dividend equivalents accrued or credited with respect to such RSU, which will otherwise remain subject to the same terms and conditions, including vesting provisions, that applied immediately prior to the Effective Time. If any holder of a Converted RSU Cash Award experiences a qualifying termination of employment or service on or following the Effective Time (other than a resignation by our executive officers for “good reason” (as defined in the COC Severance Policy)), the Converted RSU Cash Award will vest in full and be paid shortly following the holder’s termination date, provided that the holder executes and does not revoke a release of claims in favor of the surviving corporation and its affiliates.

Additionally, in accordance with the terms of the Merger Agreement and the COC Severance Policy, if our current executive officers resign for good reason following the Effective Time, their Converted RSU Cash Award (if any) will vest pro rata based on the number of days the executive officer was employed during the original vesting period, provided that the executive officer executes and does not revoke a release of claims in favor of the surviving corporation and its affiliates.

Treatment of PSUs

In connection with the completion of the Merger and subject to the terms of the Merger Agreement, at the Effective Time, each PSU that is outstanding as of immediately prior to the Effective Time will be deemed vested (i) if the applicable performance period has ended prior to the Effective Time, assuming maximum level of performance, or (ii) if the applicable performance period has not ended prior to the Effective Time, based on the greater of target and actual performance, and will cease to be outstanding and will be converted into the right to receive an amount in cash, without interest, equal to the sum of (A) the product of (1) the total number of shares of Common Stock subject to such PSU (as determined in accordance with clause (i) or (ii) above, as applicable) and (2) the per share Merger Consideration and (B) all dividend equivalents accrued or credited with respect to such PSU (such total cash amount, the “PSU Cash Payment”). Additionally, each holder of a PSU that does not pay out in full at maximum level of performance upon the Effective Time will receive an additional cash retention payment equal to the difference of the value of their PSUs at maximum level of performance (inclusive of all accrued or credited dividend equivalents with respect to such PSUs) and the payment received by such holder at the Effective Time (such difference, the “Converted PSU Cash Award”), which will be paid on the last day of the performance period applicable to the corresponding PSU, subject to the holder’s continued employment or, if earlier, upon the holder’s termination of employment without cause or, with respect to any individual who is a participant in the COC Severance Policy (including our executive officers), resignation for good reason, provided that the holder executes and does not revoke a release of claims in favor of the surviving corporation and its affiliates.

 

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Treatment of DSUs

At the Effective Time, each DSU that is outstanding as of immediately prior to the Effective Time will be converted into the right of the holder thereof to receive, at the time specified in the applicable company benefit plan and in accordance with Section 409A of the Code, an amount in cash, without interest, equal to the per share Merger Consideration and all dividend equivalents accrued or credited with respect to such DSU.

Value of Unvested Equity Awards Held by Executive Officers and Non-Employee Directors

The estimated aggregate value of unvested equity awards held by our executive officers, including our named executive officers and including such persons who have served as an executive officer since January 1, 2023, that would become vested in connection with the Merger, assuming the Merger closed on September 3, 2024 (the “Equity Awards Cutoff Date”) or, immediately thereafter, the executive officer’s termination of employment by Kellanova without cause (as defined in the COC Severance Policy) or a resignation by the executive officer for good reason, is approximately $160,430,179. This value does not include any additional equity awards that may be granted after the Equity Awards Cutoff Date. This value is calculated by multiplying the number of shares underlying such awards by the per share Merger Consideration (assuming maximum performance for PSUs, other than for Mr. Hood’s PSUs, which remained eligible to vest on a pro rata basis following his retirement and are assumed to pro rata vest at target upon the Effective Time for purposes of this disclosure) and include all dividend equivalents accrued or credited with respect to such awards. Our non-employee directors (including such persons who have served in such capacity since January 1, 2023) do not hold any unvested equity awards.

For the estimated value of unvested equity awards for each of our named executive officers individually, see the section entitled “The Merger—Summary of Potential Transaction Payments to Named Executive Officers” below.

Treatment of Employee Stock Purchase Plan

Prior to the Effective Time, Kellanova may amend the ESPP to freeze all participant payroll deduction elections in effect as of August 13, 2024. In addition, Kellanova has taken or will take all actions necessary to provide that, contingent on the Effective Time, (i) no new purchasing period under the ESPP will commence following August 13, 2024, (ii) there will be no increase in the amount of participants’ payroll deduction elections under the ESPP and no contributions other than previously elected payroll deductions during the current offering period from those in effect as of August 13, 2024, (iii) no individual will commence participation in the ESPP after August 13, 2024 and prior to the Effective Time and (iv) each outstanding purchase right issued pursuant to the ESPP will be fully exercised on the earlier of the scheduled purchase date for such purchasing period (September 30, 2024) and the date immediately prior to the Effective Time (with any participant payroll deductions not applied to the purchase of Common Stock returned to the participant) (the “Final Purchase Date”). Kellanova will notify each participant at least 10 days before the Final Purchase Date and terminate the ESPP effective as of immediately prior to the Effective Time.

COC Severance Policy

All of our executive officers participate in the COC Severance Policy. The COC Severance Policy provides for enhanced severance benefits in the event that a participant’s employment is terminated without “cause” (other than due to death or disability) or the participant resigns for “good reason”, in each case, within two years following a “change of control” of Kellanova (each as defined in the COC Severance Policy), or if the participant demonstrates that such termination is initiated by a third party that has taken steps reasonably calculated to effect a change of control or is in connection with or in anticipation of a change of control (each such termination, a “COC Termination”). In the event of a COC Termination, our executive officers will be

 

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entitled to receive the following severance payments and benefits, subject to their execution and non-revocation of a release of claims and compliance with certain restrictive covenants:

 

•

a lump sum payment equal to two times the sum of the executive officer’s (i) “Annual Base Salary” (calculated as the annualized amount of the executive officer’s highest monthly salary during the one-year period prior to the change of control, or any time after the change of control) and (ii) “Target Annual Bonus” (calculated by multiplying the executive officer’s target annual bonus percentage under the Kellanova Annual Incentive Plan by the Annual Base Salary);

 

•

prorated Target Annual Bonus for the year in which the termination date occurs (the “COC Severance Policy Prorated Bonus”) (unless a greater amount is due under the terms of the Merger Agreement, as described below in the section entitled “The Merger—Interests of Kellanova’s Directors and Executive Officers in the Merger—Annual Bonuses”);

 

•

any compensation previously deferred by the executive officer (together with any accrued interest or earnings thereon), accrued but unpaid vacation pay and the excess of the actuarial equivalent of the benefits under any qualified defined benefit or other retirement plans and any excess or supplemental retirement plans that the executive officer would have received if the executive officer remained employed with Kellanova for an additional two years post-termination over the actuarial equivalent of the actual benefits paid or payable to the executive officer under such plans on the actual termination date;

 

•

continued welfare benefit plan coverage for the executive officer and/or the executive officer’s family for up to the greater of two years and such longer period as may be provided under the applicable Kellanova plan, which coverage shall be no less favorable, in the aggregate, than the more favorable of (i) the most favorable applicable plans in effect at any time during the 120-day period prior to the change of control and (ii) the applicable plans as in effect generally at any time after the change of control for peer executives of Kellanova, with such two years to count as service credit for eligibility purposes of the executive officer’s retiree benefits (if any) under such health any welfare plans;

 

•

two years’ continued employment credit for purposes of vesting and exercisability of equity awards, which provision will be superseded by the terms and conditions of the Merger Agreement that apply to outstanding equity awards; and

 

•

outplacement services until the second taxable year following the taxable year in which the termination occurred, with the scope and provider to be selected the executive officer.

The COC Severance Policy conditions the above severance payments and benefits on the executive officer’s compliance with an employee non-solicitation covenant (for up to one year following termination) and a perpetual mutual non-disparagement covenant.

The COC Severance Policy also contains a “best net” cutback provision, pursuant to which any of the severance benefits under the COC Severance Policy that constitute “parachute payments” within the meaning of Section 280G of the Code and would be subject to the excise tax imposed by Section 4999 of the Code (the “Excise Tax”) will either be (i) provided in full or (ii) reduced to $1.00 less than the amount that would result in no portion of such benefits being subject to the Excise Tax, whichever of the foregoing amounts results in the greater amount of benefits to the executive officer on an after-tax basis, notwithstanding that all or some portion of such benefits may be subject to the Excise Tax.

The Merger will constitute a “change of control” under the COC Severance Policy. For the quantification of the estimated value of the severance payments and benefits described above that would be payable to Kellanova’s named executive officers, see the table below entitled “Named Executive Officer Merger-Related Compensation.”

 

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Section 280G Gross-Ups

In connection with the Merger, if Kellanova, after consultation with Acquiror, reasonably believes that any executive officer (and any other “disqualified individual” within the meaning of Section 280G of the Code) may receive or be entitled to receive excess parachute payments after taking certain actions to mitigate the impact of Section 4999 of the Code, Kellanova may indemnify such individual on an after-tax basis for any Excise Tax, up to an aggregate limit of $50,000,000 if the Effective Time occurs in 2024 or $25,000,000 if the Effective Time occurs after 2024.

Annual Bonuses

Pursuant to the Merger Agreement, either Acquiror or the surviving corporation will pay to each executive officer, consistent with the payment for employees who are not executive officers, a prorated annual bonus in respect of the year in which the Effective Time occurs (such bonus, the “Closing Year Bonus”), at the greater of (i) target performance and (ii) actual performance extrapolated through the end of the applicable calendar year based on actual performance through the Effective Time, as determined in good faith by the Compensation and Talent Management Committee (the “C&T Committee”) of the Board prior to the Effective Time in accordance with the terms of the Merger Agreement. The Closing Year Bonus will be paid at the same time that annual bonuses would have been paid absent the Merger, subject to the applicable executive officer’s continued employment with the successor corporation or its affiliates though the applicable payment date, or, if earlier, the executive officer’s termination (i) by the surviving corporation without “cause”, (ii) due to death or disability or (iii) by such executive officer for “good reason” (as defined in the COC Severance Policy) (each such termination, a “Qualifying Termination”), provided that the terminated executive officer executes and does not revoke a release of claims in favor of the surviving corporation and its affiliates. If an executive officer experiences a Qualifying Termination, the executive officer will be entitled to receive the greater of (A) the Closing Year Bonus, payable at the same time that the annual bonus would have been paid absent the Merger, and (B) the COC Severance Policy Prorated Bonus (as defined in the section entitled “The Merger—Interests of Kellanova’s Directors and Executive Officers in the Merger—COC Severance Policy”).

Agreements with Acquiror Following the Merger

As of the date of this proxy statement, none of Kellanova’s executive officers has entered into any new agreement, arrangement or understanding with Acquiror or any of its affiliates regarding the terms and conditions of compensation, incentive pay or employment with the Company after the Merger. Although no agreements have been entered into at this time with any of Kellanova’s executive officers, prior to or following the completion of the Merger, they may enter into new agreements and/or amendments to existing employment or compensation arrangements with Acquiror or one of its affiliates regarding their employment with the surviving corporation after the Merger.

Summary of Potential Transaction Payments to Named Executive Officers

The information set forth below is required by Item 402(t) of Regulation S-K regarding compensation that is based on or otherwise relates to the Merger that Kellanova’s named executive officers could receive in connection with the Merger, as described more fully above in the section entitled “The Merger—Interests of Kellanova’s Directors and Executive Officers in the Merger.” Such amounts have been calculated assuming (i) the Effective Time occurs on the Equity Awards Cutoff Date, which is the assumed date of Closing of the Merger solely for purposes of the disclosures in this section, (ii) a per share Merger Consideration amount equal to $83.50 per share of Common Stock, (iii) none of the named executive officers receives any additional equity awards following the Equity Awards Cutoff Date, (iv) the PSU Cash Payment is made upon the Effective Time at the target level of performance, (v) each named executive officer experiences a COC Termination or a Qualifying Termination at or immediately following the Effective Time (assuming that the Effective Time occurs on the Equity Awards Cutoff Date) in a manner that entitles them to the maximum benefit available under the COC

 

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Severance Policy and/or the Merger Agreement, (vi) the Annual Base Salary and Target Annual Bonus for purposes of the COC Severance Policy are equal to the then-current annual base salary rate and target annual bonus amount, respectively, for each named executive officer as of the Equity Awards Cutoff Date, (vii) the golden parachute rules under Section 280G of the Code do not limit the payments to the named executive officer pursuant to the “best net” provision described above and (viii) each of the named executive officers has properly executed any required releases and complied with all requirements (including any applicable restrictive covenants) necessary in order to receive all payments and benefits. Some of the assumptions used in the table below are based upon information not currently available and, as a result, the actual amounts to be received by any of the named executive officers, if any, may materially differ from the amounts set forth below.

Named Executive Officer Merger-Related Compensation

 

Name		Cash ($)(1)				Equity ($)(2)				Perquisites/ Benefits ($)(3)				Tax Reimbursement ($)(4)				Total ($)
Steven A. Cahillane		$	8,513,578			$	66,164,385			$	91,024			$	16,218,989			$	90,987,976
Amit Banati		$	4,111,348			$	19,660,682			$	91,798			$	5,093,267			$	28,957,095
David Lawlor(5)		$	2,843,692			$	11,324,267			$	122,643				—			$	14,290,602
Shumit Kapoor(6)		$	2,991,469			$	11,732,547			$	90,627				—			$	14,814,643
Christopher M. Hood(7)			—			$	1,335,249				—				—			$	1,335,249
Gary Pilnick(8)			—			$	3,872,474				—				—			$	3,872,474

 

(1)

Amounts shown reflect the estimated lump sum cash severance payments pursuant to the COC Severance Policy and the Merger Agreement, payable in the event the named executive officer experiences a COC Termination as described above. These amounts are “double-trigger” benefits and include: (i) two times the sum of each named executive officer’s Annual Base Salary (defined as the annualized amount of the such named executive officer’s highest monthly salary during one year prior to the change of control, or any time after the change of control) and such named executive officer’s Target Annual Bonus (calculated based on the Annual Base Salary); and (ii) the greater of the COC Severance Policy Prorated Bonus and the Closing Year Bonus, which, for purposes of this disclosure, has been assumed to be equal to the prorated target annual bonus based on the named executive officer’s annual base salary rate in effect as of the Equity Awards Cutoff Date; and (iii) any accrued but unpaid vacation pay, as set forth below:

 

Name		Cash Severance ($)				Prorated Target Annual Bonus ($)				Accrued but Unpaid Vacation ($)
Steven A. Cahillane		$	7,020,000			$	1,467,616			$	25,962
Amit Banati		$	3,500,000			$	594,521			$	16,827
David Lawlor		$	2,451,546			$	382,663			$	9,483
Shumit Kapoor		$	2,559,106			$	399,452			$	32,911

 

(2)

Amounts shown reflect the potential value that each named executive officer could receive in connection with accelerated vesting and cancellation and cash-out of unvested RSUs and PSUs (including both the PSU Cash Payments and the Converted PSU Cash Awards), including all dividend equivalents accrued or credited with respect thereto, as a result of the Merger. All Options held by the named executive officers are fully vested, and, accordingly, no amounts are reflected for vested Options. No DSUs are subject to vesting, and, accordingly the payout of Mr. Cahillane’s DSUs of $1,295,570 upon his termination of employment is not reflected in the table. These amounts are “single-trigger” benefits, except for the Converted PSU Cash Awards which are “double-trigger” benefits and become accelerated in full upon a termination without cause or resignation for good reason occurring between the Effective Time and the original payment date. The PSU Cash Payment amount set forth below for Mr. Hood reflects a prorated PSU amount assumed at target, with the proration calculated based on his May 1, 2024 retirement date. The table below does not

 

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include outstanding RSUs held by Mr. Hood that are currently vested but have not yet settled in accordance with their terms. The estimated amount of each such payment is set forth in the table below:

 

Name		RSUs ($)				PSU Cash Payments ($)				Converted PSU Cash Awards ($)
Steven A. Cahillane		$	24,301,105			$	20,931,640			$	20,931,640
Amit Banati		$	7,229,508			$	6,215,587			$	6,215,587
David Lawlor		$	4,588,797			$	3,367,735			$	3,367,735
Shumit Kapoor		$	3,983,263			$	3,874,642			$	3,874,642
Christopher M. Hood			—			$	1,335,249				—
Gary Pilnick		$	3,872,474				—				—

 

(3)

Amounts shown reflect (i) the estimated cost of continued health benefit plan coverage provided pursuant to the COC Severance Policy (ii) the estimated cost of outplacement services provided pursuant to the COC Severance Policy, and (iii) the estimated cost of other continued benefits for the named executive officer under the COC Severance Policy, including the annual cost for Kellanova-paid death benefits, financial planning and physical exams. These amounts are “double-trigger” benefits, as set forth below:

 

Name		Continued Health Benefit Coverage ($)				Outplacement Services ($)				Other Benefits ($)
Steven A. Cahillane		$	31,800			$	11,138			$	48,086
Amit Banati		$	34,500			$	11,138			$	46,160
David Lawlor		$	10,800			$	11,138			$	100,705
Shumit Kapoor		$	28,000			$	11,138			$	51,489

 

 

(4)

Amounts shown reflect the estimated gross-up payments in respect of any Excise Tax for each named executive officer following a resignation from employment for “good reason” upon the Closing, which are reduced based on a reasonable estimated value for the named executive officer to not compete for the one-year period following the Closing. The portion of these amounts that relates to the amounts set forth in the “Equity” column (except for such amounts relating to Converted PSU Cash Awards) is a “single-trigger” benefit and the portion of these amounts that relates to the amounts set forth in the “Cash” column, the “Perquisites/Benefits” column and Converted PSU Cash Awards is a “double-trigger” benefit.

(5)

Mr. Lawlor is employed in Ireland and is paid in Euro. In calculating the U.S. dollar equivalent, we used a conversion rate of 1.1043 based on the exchange rate as of the Equity Awards Cutoff Date. We have not included in the table a negative change of approximately -$20,000, which is an estimated amount reflecting the change to Mr. Lawlor’s retirement benefit and is negative because the present value reflects mortality between September 3, 2024, and his unreduced retirement age.

(6)	Mr. Kapoor is employed in Singapore and is paid in Singapore dollars. In calculating the U.S. dollar equivalent, we used a conversion rate of 0.7651 based on the exchange rate as of the Equity Awards Cutoff Date.

(7)	Mr. Hood retired from Kellanova on May 1, 2024 and is no longer actively employed with Kellanova.

(8)	In connection with the completion of the spin-off of WK Kellogg Co on October 2, 2023, Mr. Pilnick ceased serving as Kellanova’s Vice Chairman and Chief Legal Officer and became the Chief Executive Officer of WK Kellogg Co.

Indemnification, Exculpation and Insurance

All rights to indemnification and exculpation from liabilities for acts or omissions occurring at or prior to the Effective Time, and any rights to advancement of expenses in favor of the Company Indemnified Parties, as provided in the organizational documents of Kellanova or its subsidiaries existing as of the date of the Merger

 

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Agreement or any indemnification agreements existing as of such date will survive the Merger and will not be amended, repealed or otherwise modified for a period of six years from and after the Effective Time in any manner that would adversely affect the rights thereunder with respect to acts or omissions occurring at or prior to the Effective Time of the Company Indemnified Parties except to the extent required by applicable law. From and after the Effective Time, Acquiror will cause the Surviving Corporation and its subsidiaries to honor these obligations.

For more information, see section entitled “The Merger Agreement—Other Covenants and Agreements—Indemnification, Exculpation and Insurance.”

U.S. Federal Income Tax Considerations

The following discussion summarizes the U.S. federal income tax considerations generally applicable to U.S. and non-U.S. holders (as defined below) who exchange Common Stock for cash pursuant to the Merger. This discussion applies only to holders of Common Stock who hold their stock as a capital asset within the meaning of section 1221 of the Internal Revenue Code of 1986, which we refer to as the “Code” (generally, an asset held for investment). This summary is based on the Code, the U.S. Treasury Department regulations issued under the Code, which we refer to as the “Treasury Regulations,” and administrative rulings and court decisions in effect as of the date of this proxy statement, all of which are subject to change at any time, possibly with retroactive effect. Any such changes could affect the accuracy of the statements and conclusions set forth herein.

This summary is not binding on the Internal Revenue Service, which we refer to as the “IRS,” or a court, and there can be no assurance that the tax consequences described in this summary will not be challenged by the IRS or that they would be sustained by a court if so challenged. No ruling has been or will be sought from the IRS, and no opinion of counsel has been or will be rendered, as to the U.S. federal income tax consequences of the Merger.

For purposes of this discussion, the term “U.S. holder” means a beneficial owner of Common Stock that is for U.S. federal income tax purposes (i) a citizen or an individual who is a resident of the United States, (ii) a corporation (or other entity treated as a corporation for U.S. federal income tax purposes) created or organized under the laws of the United States, any state thereof, or the District of Columbia, (iii) an estate the income of which is includible in gross income for U.S. federal income tax purposes regardless of its source or (iv) a trust if (A) a court within the United States is able to exercise primary supervision over the administration of the trust and one or more U.S. persons have the authority to control all substantial decisions of the trust or (B) the trust has a valid election in effect under applicable Treasury Regulations to be treated as a U.S. person for U.S. federal income tax purposes.

As used herein, the term “non-U.S. holder” means a beneficial owner of Common Stock that is neither a U.S. holder nor an entity or arrangement treated as a partnership for U.S. federal income tax purposes.

This summary is not a complete description of all of the U.S. federal income tax considerations relating to the Merger and, in particular, may not address U.S. federal income tax considerations applicable to holders of Common Stock who are subject to special treatment under U.S. federal income tax law including, for example, partnerships (or an entity or arrangement treated as a partnership for U.S. federal income tax purposes) and partners therein, “controlled foreign corporations” or “passive foreign investment companies,” financial institutions, dealers in securities, insurance companies, tax-exempt entities (including private foundations), mutual funds, real estate investment trusts, personal holding companies, regulated investment companies, securities or currency dealers, traders in securities who elect to use the mark-to-market method of accounting, tax-exempt investors, S corporations, holders whose functional currency is not the U.S. dollar, tax-deferred or other retirement accounts, U.S. expatriates, former citizens or long-term residents of the United States, holders who acquired Common Stock pursuant to the exercise of an employee stock Option or right or otherwise as compensation, holders who hold Common Stock as part of a hedge, straddle, constructive sale, conversion

 

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transaction, or other integrated investment, and holders that hold or have held, directly, indirectly or constructively pursuant to attribution rules, more than 5% of the shares of Common Stock at any time during the five-year period ending on the date of the consummation of the Merger. Also, this summary does not address U.S. federal income tax considerations applicable to a holder of Common Stock who exercises appraisal rights under DGCL. In addition, no information is provided with respect to the tax consequences of the Merger under any U.S. federal law other than income tax laws (including, for example the U.S. federal estate, gift, Medicare, and alternative minimum tax laws), or any state, local, or non-U.S. tax laws that may be applicable to a holder. This summary does not address the tax consequences of any transaction other than the Merger.

If an entity or arrangement treated as a partnership for U.S. federal income tax purposes holds Common Stock, the tax treatment of a partner in such a partnership generally will depend on the status of the partner and the activities of the partnership. Any entity or arrangement treated as a partnership for U.S. federal income tax purposes that holds Common Stock, and any partners in such partnership, should consult their tax advisors regarding the tax consequences of the Merger to them in their specific circumstances.

The tax consequences of the Merger will depend on a holder’s specific situation. Holders of Common Stock should consult their tax advisor as to the tax consequences of the Merger relevant to their particular circumstances, including the applicability and effect of the alternative minimum tax and any state, local, non-U.S. or other tax laws and of changes in those laws.

Tax Consequences to U.S. holders

The receipt of cash by U.S. holders in exchange for shares of Common Stock pursuant to the Merger will generally be a taxable transaction for U.S. federal income tax purposes. In general, for U.S. federal income tax purposes, a U.S. holder who receives cash in exchange for shares of Common Stock pursuant to the Merger will recognize capital gain or loss in an amount equal to the difference, if any, between (i) the amount of cash received in the Merger and (ii) the U.S. holder’s adjusted tax basis in its Common Stock exchanged therefor.

If a U.S. holder acquired shares of Common Stock by purchasing them, the U.S. holder’s adjusted tax basis in its shares will generally equal the amount the U.S. holder paid for the relevant shares. If a U.S. holder’s holding period in the shares of Common Stock surrendered in the Merger is greater than one year as of the date of the Merger, the gain or loss will be long-term capital gain or loss. Long-term capital gains of certain non-corporate holders, including individuals, are generally subject to U.S. federal income tax at preferential rates. The deductibility of capital losses is subject to certain limitations. If a U.S. holder acquired different blocks of Common Stock at different times or different prices, such U.S. holder must determine its adjusted tax basis and holding period separately with respect to each block of Common Stock.

Information Reporting and Backup Withholding

Payments of cash to a U.S. holder of Common Stock pursuant to the Merger may, under certain circumstances, be subject to information reporting and backup withholding, unless the holder provides proof of an applicable exemption or furnishes its taxpayer identification number, and otherwise complies with all applicable requirements of the backup withholding rules. Certain holders (such as corporations) are exempt from backup withholding.

To avoid backup withholding, U.S. holders that do not otherwise establish an exemption should return a properly completed and executed IRS Form W-9 included with the letter of transmittal, certifying that such holder is a United States person, that the taxpayer identification number provided in the IRS Form W-9 is correct, and that such holder is not subject to backup withholding.

Backup withholding is not an additional tax. Any amounts withheld under the backup withholding rules may be refunded or credited against a holder’s U.S. federal income tax liability, if any, provided that such holder furnishes the required information to the IRS in a timely manner.

 

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Tax Consequences to non-U.S. holders

Any gain realized by non-U.S. holders pursuant to the Merger generally will not be subject to U.S. federal income tax unless:

 

(i)

the gain is effectively connected with a trade or business of the non-U.S. holder in the United States (and, if required by an applicable income tax treaty, is also attributable to a U.S. permanent establishment of the non-U.S. holder or, in the case of an individual, a fixed base in the United States maintained by such non-U.S. holder), in which case the non-U.S. holder generally will be subject to tax on such gain in the same manner as a U.S. holder, and, if the non-U.S. holder is a corporation, such corporation may be subject to a branch profits tax at the rate of 30% (or such lower rate as may be specified by an applicable income tax treaty); or

 

(ii)

the non-U.S. holder is an individual who is present in the United States for 183 days or more in the taxable year of the Merger and certain other conditions are met, in which case the non-U.S. holder generally will be subject to a 30% tax (or tax at such lower rate as may be specified under an applicable income tax treaty) on the non-U.S. holder’s net gain realized in the Merger.

Information Reporting and Backup Withholding

Payments of cash to a non-U.S. holder of Common Stock pursuant to the Merger will be subject to information reporting and, in certain circumstances, backup withholding, unless such non-U.S. holder provides the paying agent with a properly executed applicable IRS Form W-8 (or any appropriate successor or replacement forms) certifying under penalties of perjury the holder’s non-U.S. status (and the payor or applicable withholding agent does not have actual knowledge or reason to know that the non-U.S. holder is a United States person as defined under the Code) or otherwise establishes an exemption. Copies of information returns that are filed with the IRS may be made available under an applicable tax treaty or information exchange agreement to the taxing authorities of the country in which the non-U.S. holder resides or is established.

Backup withholding is not an additional tax. Any amounts withheld under the backup withholding rules may be refunded or credited against a holder’s U.S. federal income tax liability, if any, provided that such holder furnishes the required information to the IRS in a timely manner.

The discussion set forth above is included for general information purposes only and is not a complete analysis or discussion of all potential tax consequences relevant to holders of Common Stock. Holders of Common Stock are strongly urged to consult their tax advisors with respect to the tax consequences of the Merger in their particular circumstances, including the applicability and effect of the alternative minimum tax and any state, local, non-U.S. or other tax laws and of changes in those laws.

Litigation Related to the Merger

Lawsuits arising out of the Merger may be filed in the future. In addition, Kellanova has received demand letters on behalf of purported shareowners alleging that Kellanova’s preliminary proxy statement, filed September 11, 2024, misrepresents and/or omits certain purportedly material information relating to Kellanova’s financial projections, the financial analyses performed by Kellanova’s financial advisors, potential conflicts of interest involving such financial advisors and Kellanova insiders and the negotiation process in connection with the Merger.

Kellanova cannot predict the outcome of the demand letters or any lawsuits or other demand letters it may receive. Kellanova believes the claims asserted in the demand letters are without merit. Lawsuits and additional demand letters arising out of the Merger may also be filed or received in the future. If additional similar demand letters or lawsuits are filed or received, absent new or significantly different allegations, Kellanova will not necessarily disclose such lawsuits or additional demand letters.

 

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Regulatory Approvals

The completion of the Merger is subject to:

 

•

any applicable waiting period (and any extension thereof, including under any agreement between a party and a governmental authority agreeing not to consummate the Merger prior to a certain date) under the HSR Act relating to the consummation of the Merger having expired or been terminated;

 

•

each other clearance or approval under any Antitrust Law in the jurisdiction set forth in the specified section of the Company Disclosure Schedule, which jurisdictions include, in respect of competition and antitrust laws, Brazil, Canada, Chile, the Common Market for Eastern and Southern Africa, Costa Rica, Egypt, the European Union, India, Japan, Kuwait, Mexico, Nigeria, Saudi Arabia, Serbia, South Africa, South Korea, Turkey and Ukraine and may include others, in respect of foreign investment laws, Austria, Belgium, France, Italy and Romania and may include others and, in respect of trade regulation laws, the European Union under the Foreign Subsidies Regulation; and

 

•

(i) no governmental authority of competent jurisdiction has entered any order that remains in effect and no law has been adopted or is effective, in each case, that temporarily or permanently prohibits, enjoins or makes illegal the consummation of the Merger or (ii) no legal proceeding has been brought by a governmental authority that remains pending and that seeks an order that would impose a Legal Restraint.

Under the HSR Act and related rules, certain transactions, including the Merger, may not be completed until required information and materials are furnished to the Antitrust Division and the FTC and statutory waiting period requirements have been satisfied. Following the filing by Kellanova and Acquiror of their respective Notification and Report Forms, the waiting period under the HSR Act is expected to expire thirty days later unless earlier terminated or extended by the issuance of a Second Request. If the Antitrust Division or FTC issue a Second Request, the waiting period with respect to the Merger will be extended for an additional period of 30 calendar days following both parties’ substantial compliance with that request unless earlier terminated by the FTC or the Antitrust Division. After that time, the waiting period may be extended only by court order or with the consent of the parties. At any time before or after the consummation of any such transactions, the FTC or the Antitrust Division could take such action under the Antitrust Laws of the United States as it deems necessary or desirable in the public interest, including seeking to enjoin the Merger.

Required Vote of Shareowners

Approval of the Merger Proposal is a condition to completion of the Merger.

The vote on the Merger Proposal is a vote separate and apart from the vote to approve either the Advisory Compensation Proposal or the Adjournment Proposal. Accordingly, a Kellanova shareowner may vote to approve the Merger Proposal and vote not to approve the Advisory Compensation Proposal or the Adjournment Proposal, and vice versa.

Approval of the Merger Proposal requires the affirmative vote of holders of a majority of the outstanding shares of Common Stock entitled to vote thereon. A failure to vote (including a failure to instruct your bank, broker, trust or other nominee to vote) or an abstention will have the same effect as a vote “AGAINST” the Merger Proposal.

Pursuant to the Voting Agreement and subject to the terms and conditions thereof, each Voting Agreement Shareowner agreed, among other things, subject to the terms and conditions of its respective Voting Agreement, to vote all of the shares of Common Stock held by it in favor of the Merger Proposal at the Special Meeting. For more information, please see the section entitled “The Voting Agreements.” For more information

 

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regarding the security ownership of the Kellogg Foundation Trust, G. Zachary Gund Entities and Gund Trusts, please see the section entitled “Certain Beneficial Owners of Common Stock.”

The Board, after due and careful discussion and consideration, unanimously (i) determined that the terms of the Merger Agreement and the transactions contemplated thereby, including the Merger, are fair to, and in the best interests of, Kellanova and Kellanova shareowners; (ii) determined that it is in the best interests of Kellanova and Kellanova shareowners, and declared it advisable, to enter into, and adopted, the Merger Agreement providing for the Merger, upon the terms and subject to the conditions set forth therein and in accordance with the applicable provisions of the DGCL; (iii) approved and authorized the execution and delivery of the Merger Agreement, the performance of Kellanova’s covenants and other obligations thereunder and the consummation of the Merger upon the terms and subject to the conditions set forth in the Merger Agreement; (iv) resolved to recommend that Kellanova shareowners vote in favor of the adoption of the Merger Agreement and the transactions contemplated thereby, including the Merger, in accordance with the DGCL and to include such recommendation in this proxy statement; and (v) directed that the adoption of the Merger Agreement be submitted for consideration by Kellanova shareowners at a meeting thereof.

THE BOARD ACCORDINGLY UNANIMOUSLY RECOMMENDS THAT YOU VOTE “FOR” THE MERGER PROPOSAL.

 

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THE MERGER AGREEMENT

Below is a summary of the material provisions of the Merger Agreement, a copy of which is attached to this proxy statement as Annex A and which is incorporated by reference into this proxy statement. This summary does not purport to be complete, may not contain all of the information about the Merger Agreement that is important to you, and is subject to, and qualified in its entirety by, the full text of the Merger Agreement. We encourage you to read carefully the Merger Agreement in its entirety, as the rights and obligations of the parties thereto are governed by the express terms of the Merger Agreement and not by this summary or any other information contained in this proxy statement.

Explanatory Note Regarding the Merger Agreement

The following summary of the Merger Agreement, and the copy of the Merger Agreement attached as Annex A to this proxy statement, are intended to provide information regarding the terms of the Merger Agreement and are not intended to provide any factual information about Kellanova or modify or supplement any factual disclosures about Kellanova in its public reports filed with the SEC. In particular, the Merger Agreement and the related summary are not intended to be disclosures regarding any facts and circumstances relating to Kellanova. The Merger Agreement contains representations and warranties by, and covenants of, Kellanova, Acquiror and Merger Sub (and solely in connection with (i) providing a guaranty of Acquiror’s and Merger Sub’s obligations under the Merger Agreement and (ii) undertakings with respect to compliance with the confidentiality agreement and to obtain financing and regulatory approvals, Mars) that were made only for purposes of the Merger Agreement and as of specified dates. The representations, warranties and covenants in the Merger Agreement were made solely for the benefit of the parties to the Merger Agreement, may be subject to limitations agreed upon by the contracting parties, including being modified and qualified by confidential disclosures made for the purposes of allocating contractual risk between the parties to the Merger Agreement instead of establishing these matters as facts and may be subject to contractual standards of materiality or material adverse effect applicable to the contracting parties that generally differ from those applicable to investors. In addition, information concerning the subject matter of the representations, warranties and covenants may change after the date of the Merger Agreement, which subsequent information may or may not be fully reflected in Kellanova’s public disclosures. Investors are not third-party beneficiaries under the Merger Agreement. Accordingly, you should not rely on the representations, warranties and covenants or any descriptions thereof as characterizations of the actual state of facts or condition of Kellanova, Acquiror, Merger Sub or Mars.

Additional information about Kellanova may be found elsewhere in this proxy statement and Kellanova’s other public filings. See the section entitled “Where You Can Find More Information” beginning on page 122.

Structure of the Merger; Certificate of Incorporation, Bylaws and Directors and Officers of the Surviving Corporation

At the Effective Time, Merger Sub will merge with and into Kellanova and the separate corporate existence of Merger Sub will cease. Kellanova will be the Surviving Corporation in the Merger and will continue its corporate existence as a wholly owned subsidiary of Acquiror. At the Effective Time, all of the property, rights, privileges, powers and franchises of Kellanova and Merger Sub will vest in the Surviving Corporation, and all debts, liabilities and duties of Kellanova and Merger Sub will become the debts, liabilities and duties of the Surviving Corporation, all as provided under the DGCL and the Delaware Limited Liability Company Act (the “DLLCA”). At the Effective Time, the Certificate of Incorporation and Bylaws of Kellanova will be amended and restated as a result of the Merger in the forms attached as Exhibit A and Exhibit B to Annex A to this proxy statement, respectively. The Surviving Corporation Organizational Documents include provisions with respect to exculpation, indemnification and advancement of expenses that are no less favorable to any person who is or prior to the Effective Time becomes, or has been at any time prior to the date of the Merger Agreement,

 

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a director or officer of Kellanova (in each case, when acting in such capacity), which we collectively refer to as the “Company Indemnified Parties,” with respect to actions or omissions occurring at or prior to the Effective Time as those contained in the Certificate of Incorporation and Bylaws of Kellanova as of immediately prior to the Effective Time.

Subject to applicable law, the managers of Merger Sub immediately prior to the Effective Time will be the initial directors of the Surviving Corporation and will hold office until their respective successors are duly elected and qualified, or their earlier death, resignation or removal. The officers of Kellanova immediately prior to the Effective Time, or such other individuals designated by Acquiror as of the Effective Time, will be the initial officers of the Surviving Corporation and will hold office until their respective successors are duly elected and qualified, or their earlier death, resignation or removal.

When the Merger Becomes Effective; Closing and Effective Time

The Closing of the Merger will take place at the offices of Skadden at One Manhattan West, New York, New York 10001 at 10:00 a.m., New York City time, on the third business day (or other date agreed upon in writing by the parties) after the satisfaction or, if permissible, waiver of the last of the closing conditions set forth in the Merger Agreement (other than any such conditions that by their nature are to be satisfied by action taken at or immediately prior to the Closing of the Merger, but subject to the satisfaction or waiver of such conditions at or immediately prior to the Closing of the Merger), unless another time, date or place is agreed to in writing by Kellanova and Acquiror (such date, the “Closing Date”).

On the Closing Date, the parties will cause a certificate of merger with regard to the Merger to be duly executed and filed with the Secretary of State of the State of Delaware as provided under the DGCL and DLLCA. The Merger will become effective at such time as such certificate of merger is duly filed with the Secretary of State of the State of Delaware or on such later date and time as will be agreed upon by Kellanova and Acquiror and specified in such certificate of merger.

Effect of the Merger on the Common Stock

As of the Effective Time, each share of Common Stock issued and outstanding immediately prior to the Effective Time (other than (a) shares owned (or held in treasury) by Kellanova, (b) shares owned by any of Kellanova’s wholly owned subsidiaries, Mars, Acquiror or Merger Sub (or any other subsidiary of Mars) and (c) shares for which a holder or beneficial owner properly perfects its appraisal rights under the DGCL) will be canceled and automatically converted into the right to receive the Merger Consideration, without interest, and subject to any applicable withholding taxes. In addition, in respect of each such share of Common Stock, if Kellanova declares and sets a record date for a dividend as permitted under the Merger Agreement (as further described in the section entitled “The Merger Agreement—Conduct of Business Pending the Merger” beginning on page 89), and the Effective Time occurs after the record date for such dividend and prior to the payment date for such dividend, such dividend (and any applicable dividend equivalent rights to the extent any holder of a Kellanova equity award is entitled to such rights under the terms of such equity awards as in effect on the date Kellanova declares the applicable dividend) will be paid to the holders of record as of such record date on the scheduled payment date.

As of the Effective Time, each share of Common Stock owned or held in treasury by Kellanova immediately prior to the Effective Time will be automatically canceled and no consideration will be delivered in exchange thereafter.

As of the Effective Time, each share of Common Stock that is owned by any direct or indirect wholly owned subsidiary of Kellanova or by Mars or any of its subsidiaries (including Acquiror and its subsidiaries) immediately prior to the Effective Time will remain outstanding at the Effective Time and will not be converted into the right to receive the Merger Consideration.

 

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Shares of Common Stock issued and outstanding immediately prior to the Effective Time with respect to which a Kellanova shareowner did not vote in favor of the adoption of the Merger Agreement (or consent thereto in writing) and is entitled to demand and has properly made a demand for appraisal and who does not thereafter fail to perfect or otherwise effectively waive, withdraw or otherwise lose such shareowner’s right to appraisal in accordance with Section 262, will not be converted into the right to receive the Merger Consideration, but instead at the Effective Time will be automatically canceled and converted into the right to receive payment of such amounts as are payable in accordance with Section 262.

As of the Effective Time, each common interest issued by Merger Sub and outstanding will be automatically converted into and become one fully paid and nonassessable share of common stock of the Surviving Corporation.

Withholding Rights

Each of Kellanova, Acquiror, Merger Sub, the Surviving Corporation and the payment agent for the Merger Consideration will be entitled to deduct and withhold from the amounts that would otherwise be payable under the terms of the Merger Agreement any amounts that may be required to be deducted or withheld with respect to the making of such payment under any applicable tax law, and any amounts so deducted or withheld and that, if required, are paid over to the applicable governmental entity will be treated as having been paid to the person in respect of which such deduction or withholding was made.

Treatment of Kellanova Incentive Awards

Treatment of Options

At the Effective Time, each Option that is outstanding and unexercised as of immediately prior to the Effective Time, by virtue of the Merger, will cease to be outstanding and will be converted into the right to receive an amount in cash, without interest, equal to the product of the total number of shares of Common Stock subject to such Option and the excess, if any, of the per share Merger Consideration over the exercise price per share of Common Stock underlying the Option, subject to tax withholding. Any Option with a per share exercise price equal to or greater than the per share Merger Consideration will be canceled as of the Effective Time without payment. All Options are currently fully vested.

Treatment of RSUs

At the Effective Time, each RSU that was granted prior to the date of the Merger Agreement and that is outstanding immediately prior to the Effective Time (including any restricted stock unit granted in 2022 that was originally subject to vesting based on service and performance goals), by virtue of the Merger, will be deemed fully vested as to the number of shares of Common Stock issuable pursuant to such RSU, will cease to be outstanding and will be converted into the right to receive an amount in cash, without interest, equal to the sum of the product of such number of shares of Common Stock issuable pursuant to the RSU and the per share Merger Consideration, plus all dividend equivalents accrued or credited with respect to such RSU, subject to tax withholding. Each RSU granted on or after the date of the Merger Agreement that is outstanding and unvested immediately prior to the Effective Time will automatically be cancelled and converted into the contractual right to receive a payment in an amount of cash (without interest and subject to applicable tax withholdings) equal to a Converted RSU Cash Award. Each Converted RSU Cash Award will generally be subject to the same terms and conditions as applied to such RSU immediately prior to the Effective Time and will become payable in accordance with the original vesting schedule applicable to the corresponding RSU or, if earlier, upon a qualifying termination of employment.

 

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Treatment of PSUs

At the Effective Time, each PSU that is outstanding immediately prior to the Effective Time, by virtue of the Merger, will be deemed fully vested as to the number of shares of Common Stock (i) if the performance period applicable to such PSU ends prior to the Effective Time, issuable pursuant to such PSU assuming maximum level of performance, and (ii) if the performance period applicable to such PSU does not end prior to the Effective Time, issuable pursuant to such PSU at the greater of target or actual level of performance, as determined by Kellanova in good faith . All PSUs will cease to be outstanding and will be converted into the right to receive an amount in cash, without interest, equal to the sum of the product of such number of shares of Common Stock issuable pursuant to the PSU (based on the level of vesting as described above) and the per share Merger Consideration, plus all dividend equivalents accrued or credited with respect to such PSU, subject to tax withholding. Holders of PSUs that do not pay out in full at maximum level of performance at the Effective Time will also be entitled to a cash retention payment based on the difference between the value of their PSUs at maximum level of performance and the payment received by such holder at the Effective Time, which will be payable on the last day of the performance period applicable to the corresponding PSU, subject to the holder’s continued employment through such date or, if earlier, upon a qualifying termination of employment.

Treatment of DSUs

At the Effective Time, each DSU that is outstanding immediately prior to the Effective Time, by virtue of the Merger, will cease to be outstanding and will be converted into the right to receive, at the time specified in the applicable company benefit plan and in accordance with Section 409A of the Code, an amount in cash, without interest, equal to the sum of the product of such number of shares of Common Stock underlying the DSU and the per share Merger Consideration, plus all dividend equivalents accrued or credited with respect to such DSU, subject to tax withholding.

Treatment of Employee Stock Purchase Plan

Prior to the Effective Time, Kellanova may, in its discretion, amend the ESPP to freeze all participant payroll deduction elections in effect as of the date of the Merger Agreement under the ESPP, and is required to take all actions necessary to (i) provide that, contingent on the Effective Time: (1) no new purchasing period under the ESPP will commence following the date of the Merger Agreement; (2) there will be no increase in the amount of participants’ payroll deduction elections under the ESPP and no contributions other than previously elected payroll deductions during the current offering period from those in effect as of the date of the Merger Agreement; (3) no individual will commence participation in the ESPP during the period from the date of the Merger Agreement through the Effective Time; (4) each purchase right issued pursuant to the ESPP will be fully exercised on the earlier of the scheduled purchase date for such purchasing period and the date that is immediately prior to the Effective Time, (ii) notify each participant that the purchase date for his or her purchase right issued pursuant to the ESPP has been changed and (iii)  terminate the ESPP effective as of immediately prior to the Effective Time.

Payment for Common Stock in the Merger

Prior to the Effective Time, Acquiror will appoint a payment agent reasonably acceptable to Kellanova. At or prior to the Effective Time, Acquiror will deposit with, or will make or cause to be made available to, the payment agent cash sufficient to pay the aggregate Merger Consideration payable pursuant to the Merger Agreement. As promptly as reasonably practicable after the Effective Time (and in any event within three business days of the Closing Date), Acquiror will cause the payment agent to send to each holder of a certificate that immediately prior to the Effective Time represented shares of Common Stock (each, a “Certificate”) that were converted into the right to receive the Merger Consideration a letter of transmittal and instructions for use.

Upon surrender of a Certificate (or effective affidavit of loss in lieu thereof) to the payment agent together with the letter of transmittal, duly completed and validly executed, the holder of such Certificate will be

 

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entitled to receive the Merger Consideration (less applicable withholding taxes) in exchange for each share of Common Stock formerly represented by such Certificate. No interest will be paid or will accrue on the cash payable upon the surrender or transfer of such Certificate.

As promptly as practicable following the Effective Time, the payment agent will issue and deliver the Merger Consideration to each holder of book-entry shares that immediately prior to the Effective Time represented shares of Common Stock that were converted pursuant to the Merger Agreement into the right to receive the Merger Consideration, and the book-entry shares will be canceled, and unless reasonably requested by the payment agent, without such holder being required to deliver a Certificate or any letter of transmittal, “agent’s message” or other documents to the payment agent. No interest will be paid or accrue on the cash payable in respect of any book-entry share.

Representations and Warranties

The Merger Agreement contains representations and warranties of Kellanova, Acquiror, Merger Sub and, solely in connection with providing a guaranty of Acquiror’s and Merger Sub’s obligations under the Merger Agreement, Mars.

Some of the representations and warranties in the Merger Agreement are qualified by materiality qualifications or a “Company Material Adverse Effect” qualification with respect to Kellanova or an “Acquiror Material Adverse Effect” qualification with respect to Acquiror and Merger Sub. For purposes of the Merger Agreement, a “Company Material Adverse Effect” with respect to Kellanova means any fact, change, circumstance, event, occurrence, condition, development or combination of the foregoing that is materially adverse to the business, properties, results of operations or condition (financial or otherwise) of Kellanova and its subsidiaries, taken as a whole; provided, however, that a “Company Material Adverse Effect” will not be deemed to include the impact of:

 

(i)

changes in GAAP (or authoritative interpretation or enforcement thereof) after the date of the Merger Agreement;

 

(ii)

changes in laws (or authoritative interpretation or enforcement thereof) after the date of the Merger Agreement;

 

(iii)

changes in global, national or regional political conditions (including cyber-attacks, acts of terrorism or sabotage, the outbreak of war or other armed hostilities or the escalation of any of the foregoing) after the date of the Merger Agreement;

 

(iv)

any epidemics or pandemics (including COVID-19) and any hurricane, flood, tornado, earthquake or other natural disaster;

 

(v)

actions or omissions required of Kellanova or any of its subsidiaries by the Merger Agreement or any action or omission taken at the written request of Acquiror;

 

(vi)

(A) the negotiation, execution, announcement or existence of the Merger Agreement or the Merger, including the announcement of the identity of Acquiror (provided that the forgoing will not apply to certain representations or warranties related to (x) required governmental filings, consents and approvals, (y) conflicts or violations under contracts, organizational documents and laws and (z) acceleration or triggering of certain employee benefits, in each case, to the extent the purpose of such representation or warranty is to address the consequences resulting from the execution and delivery of the Merger Agreement or the consummation of the transactions), or (B) any communication by Acquiror or any of its affiliates regarding plans or proposals, with respect to Kellanova and its subsidiaries, in the case of each of the foregoing clauses (A) and (B), including the impact thereof on the relationships, contractual or otherwise, of Kellanova and its subsidiaries with customers, suppliers, lenders, lessors, business partners and employees (including any employee attrition);

 

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(vii)

any breach of the Merger Agreement by Acquiror or Merger Sub;

 

(viii)

any change, in and of itself, in the trading price or volume of Common Stock or the failure, in and of itself, to meet internal or external budgets, forecasts, projections or predictions or analysts’ expectations or projections for any future period (provided, that the underlying causes of such change or failure may be taken into account in determining the existence of a “Company Material Adverse Effect”);

 

(ix)

changes in the global securities, credit or other financial markets, or in general economic, business or market conditions, including any disruptions thereof or any change in prevailing interest rates, after the date of the Merger Agreement; or

 

(x)

conditions generally affecting the U.S. or any foreign economy (in which Kellanova and its subsidiaries operate) or the industries in which Kellanova and its subsidiaries operate (including changes to commodity prices).

However, with respect to the matters described in (i), (ii), (iii), (iv), (ix) and (x) above, such impact will be taken into account to the extent that the effects of the change are disproportionately adverse to the business, properties, results of operations or condition (financial or otherwise) of Kellanova and its subsidiaries, taken as a whole, as compared to other companies in the industries in which Kellanova and its subsidiaries operate.

For the purpose of the Merger Agreement, an “Acquiror Material Adverse Effect” with respect to Acquiror and Merger Sub means any fact, change, circumstance, event, occurrence, condition, development or combination of the foregoing that prevents, materially delays or materially impairs the ability of Acquiror or Merger Sub to consummate the transactions.

Subject to certain exceptions in the Merger Agreement, Company Disclosure Schedule and certain of Kellanova’s public filings with the SEC filed after January 1, 2021 and made publicly available prior to the date of the Merger Agreement, the Merger Agreement contains representations and warranties of Kellanova as to, among other things:

 

•

organization, good standing and qualification to do business;

 

•

capital stock;

 

•

corporate authority, and consents and approvals relating to the execution, delivery and performance of the Merger Agreement;

 

•

reports, forms, documents and financial statements of Kellanova required by the SEC;

 

•

establishment and maintenance of certain disclosure controls and procedures and internal control over financial reporting;

 

•

absence of undisclosed liabilities;

 

•

compliance with applicable laws and possession of permits necessary for the lawful operation of Kellanova and its subsidiaries’ businesses;

 

•

compliance with sanctions and export control laws;

 

•

absence of investigations or reviews pending or threatened by any governmental entity and orders of or before any governmental entity;

 

•

certain details with respect to litigation against Kellanova or its subsidiaries;

 

•

compliance with applicable environmental laws and certain details with respect to other environmental matters;

 

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•

certain details with respect to Kellanova’s employee benefit plans, employee relations and labor matters;

 

•

absence of certain events or changes in the businesses of Kellanova and its subsidiaries, including that there has not been a “Company Material Adverse Effect,” from December 31, 2023 through the date of the Merger Agreement;

 

•

accuracy and completion of the information supplied by Kellanova for inclusion in this proxy statement;

 

•

certain details pertaining to Kellanova’s and its subsidiaries’ tax returns, filings and other tax matters;

 

•

certain details pertaining to Kellanova’s and its subsidiaries’ intellectual property;

 

•

certain details pertaining to Kellanova’s and its subsidiaries’ privacy and data protection practices;

 

•

certain details pertaining to the real estate owned and leased by Kellanova or its subsidiaries;

 

•

insurance;

 

•

certain details pertaining to Kellanova’s and its subsidiaries’ material contracts;

 

•

certain details pertaining to Kellanova’s top suppliers and customers;

 

•

opinions of Kellanova’s financial advisors;

 

•

absence of broker’s and finder’s fees other than those described in the Merger Agreement; and

 

•

certain actions in respect of potentially applicable state anti-takeover statutes or regulations and any similar provisions in the Certificate of Incorporation or Bylaws.

Subject to certain exceptions in the Merger Agreement, the Merger Agreement also contains representations and warranties of Acquiror and Merger Sub as to, among other things:

 

•

organization and good standing;

 

•

corporate authority, and consents and approvals relating to the execution, delivery and performance of the Merger Agreement;

 

•

accuracy and completion of the information supplied by Acquiror and Merger Sub for inclusion in this proxy statement;

 

•

availability of financing necessary to consummate the transactions;

 

•

ownership, business and operations of Merger Sub;

 

•

absence of litigation in connection with the Merger Agreement or the Merger;

 

•

absence of ownership of Common Stock by Mars, Acquiror, Merger Sub and certain related parties as of the date of the Merger Agreement;

 

•

solvency of the Surviving Corporation; and

 

•

ability to deliver, and the accuracy of, an opinion of counsel as to certain tax matters.

Conduct of Business Pending the Merger

The Merger Agreement provides that, during the period commencing on the signing of the Merger Agreement and ending on the earlier of the termination of the Merger Agreement in accordance with its terms and the Effective Time, except (i) as required by applicable law, (ii) as expressly required by the Merger Agreement, (iii) as set forth in the Company Disclosure Schedule, (iv) any action taken reasonably and in good faith in response to COVID-19 or COVID-19 measures or any other similar public health outbreak or (v) with the

 

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prior written consent of Acquiror (which will not be unreasonably withheld, conditioned or delayed), Kellanova will, and will cause each of its subsidiaries to, (x) use commercially reasonable efforts to conduct its business in the ordinary course consistent with past practice, and (y) use commercially reasonable efforts to maintain and preserve substantially intact its business organization, and preserve existing relationships with key employees, persons having significant business dealings with Kellanova or any of its subsidiaries and any governmental entity that has jurisdiction over Kellanova or its subsidiaries.

Further, the Merger Agreement also provides that, from the signing date of the Merger Agreement through the earlier of the termination of the Merger Agreement in accordance with its terms and the Effective Time, except (i) as required by applicable law, (ii) as expressly required by the Merger Agreement, (iii) as set forth in the Company Disclosure Schedule or (iv) with the prior written consent of Acquiror (which consent will not be unreasonably withheld, conditioned or delayed; provided, that Acquiror will be permitted, in its sole discretion, to withhold, condition or delay its consent with respect to the matters described in (xi) below), Kellanova will not, and will cause its subsidiaries not to, among other things (and no action by Kellanova or its subsidiaries with respect to the following matters would constitute a breach of the preceding paragraph unless it would be a breach of this paragraph):

 

(i)

amend Kellanova’s or its subsidiaries’ organizational documents except for amendments to its subsidiaries’ organizational documents that would not reasonably be expected to materially and adversely affect Acquiror or any of its subsidiaries;

 

(ii)

split, combine or reclassify any of its capital stock, repurchase (or redeem, purchase or otherwise acquire) any shares of capital stock or make, declare or pay dividends or distributions thereon, subject to limited exceptions including payment of regular quarterly cash dividends declared and paid as set forth in the Company Disclosure Schedule;

 

(iii)

issue, sell or grant any right to acquire additional shares of capital stock, subject to limited exceptions including in connection with (i) the settlement or exercise, as applicable, of equity awards, (ii) purchases pursuant to the ESPP and (iii) benefit plans in effect as of the date of the Merger Agreement;

 

(iv)

enter into a voting agreement or adopt a shareholder rights plan;

 

(v)

adopt a plan of complete or partial liquidation, dissolution, merger, consolidation, restructuring, recapitalization or other reorganization;

 

(vi)

incur or guarantee indebtedness, subject to limited exceptions including (i) borrowings under any credit facility in place as of the date of the Merger Agreement or replacements thereof up to $200 million in the aggregate, (ii) issuances of letters of credit under any credit facility in place as of the date of the Merger Agreement or replacements thereof up to $100 million in the aggregate, (iii) borrowings under any commercial paper program up to $600 million and (iv) indebtedness for borrowed money incurred in the ordinary course consistent with past practice among Kellanova and its subsidiaries or among Kellanova’s subsidiaries;

 

(vii)

incur any liens, except for permitted liens;

 

(viii)

redeem, repurchase or prepay indebtedness (except for (I) any repayments and prepayments under Kellanova’s credit facilities or (II) working capital lines of credit in the ordinary course of business consistent with past practice);

 

(ix)

dispose of material intellectual property rights, properties or assets, subject to limited exceptions, other than in the ordinary course of business consistent with past practice;

 

(x)

cancel, release or assign any indebtedness owed to it or material claims held by it against any other person in excess of $10 million in the aggregate, other than in the ordinary course of business consistent with past practice;

 

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(xi)

Acquire any person or business (excluding any acquisitions of supplies and inventory in the ordinary course of business consistent with past practice), make any material investment in any other person (other than ordinary course investments in subsidiaries of Kellanova), make any loans or advances to any other person (subject to limited ordinary course exceptions) or enter into any new material line of business, other than in the ordinary course of business consistent with past practice;

 

(xii)

make any capital expenditures in excess of the aggregate amounts set forth in the Company Disclosure Schedule;

 

(xiii)

other than in the ordinary course of business consistent with past practice, enter into a new material contract or any other contract with consideration paid or payable by Kellanova or any of its subsidiaries of more than $25 million in fiscal year 2023 or any fiscal year thereafter or terminate, amend (other than by renewing on terms not materially different) or waive a right in a manner material and adverse to Kellanova and its subsidiaries under an existing material contract (or amend any contract such that it would constitute a material contract);

 

(xiv)

enter into any contract that contains, or amend an existing contract such that it would contain, terms that would be binding on Acquiror and its affiliates (other than Kellanova and its subsidiaries) after giving effect to the Merger and that would materially restrict their ability to compete in any business or with any person or in any geographic area or buy and sell products and services from or to any person, which restrictions in each case would, to Kellanova’s knowledge, be material and adverse to Mars and its subsidiaries;

 

(xv)

except as required by applicable law or pursuant to the requirements of any written agreements or benefit plans in existence as of the date of the Merger Agreement or as set forth in the Company Disclosure Schedule, (i) increase the compensation or benefits payable or that become payable to any current or former employee or other service provider, (ii) grant any increase in severance or termination pay to any current or former employee or other service provider or pay or award, or commit to pay or award, any bonuses or incentive compensation (including equity and equity-based awards) to any current or former employee or other service provider, (iii) grant or award, or commit to grant or award, any equity or equity-based awards or incentives (including any Options, RSUs, DSUs or PSUs) to any current or former employee or other service provider, (iv) amend any existing written employment agreement or offer letter with any current or former employee or other service provider, (v) amend or enter into any employment agreement or offer letter, (vi) establish, adopt, enter into, amend, renew or terminate any collective bargaining agreement or benefit plan, (vii) take any action to accelerate any payment or benefit, or the funding of any payment or benefit, payable or to become payable to any current or former employee or other service provider, (viii) amend the funding policy or contribution rate of any benefit plan or change any underlying actuarial assumptions used to calculate accrued benefit liabilities or benefits payable under any benefit plan, except as may be required by GAAP or applicable law, (ix) waive or amend any restrictive covenant, (x) terminate the employment or service of any employee or other service provider other than for cause or (xi) hire any person who would be an employee or other service provider.

 

(xvi)

materially change its financial accounting principles, practices or methods, other than as required by GAAP or applicable law;

 

(xvii)

settle litigation subject to limited exceptions, including in the ordinary course consistent with past practice or involving amounts to be paid by Kellanova (net of insurance proceeds and indemnity or similar payments) in settlement of $10 million or less;

 

(xviii)

engage in certain tax-related actions;

 

(xix)

other than in the ordinary course of business consistent with past practice, abandon or fail to take any actions necessary to maintain any of its rights in any of Kellanova’s material intellectual property;

 

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(xx)

other than in the ordinary course of business consistent with past practice, make or forgive any loans to any employees, officers or directors of Kellanova or any of its subsidiaries;

 

(xxi)

close any plant or facility;

 

(xxii)

take any action or cause any registration statement to be declared effective by the SEC or issue, sell, transfer or offer to sell or transfer any securities pursuant to a registration statement (other than pursuant to any registration statement on form S-8 or pursuant to the Kellanova Direct Stock Purchase and Dividend Reinvestment Plan pursuant to the registration statement on form S-3); or

 

(xxiii)

authorize, offer to any third party, agree or commit to take any of the above actions.

Other Covenants and Agreements

Non-Solicitation; Takeover Proposals

Except as expressly permitted by the Merger Agreement, Kellanova will, and will cause each of its subsidiaries, and will use its reasonable best efforts to cause its and its subsidiaries’ representatives (i) to immediately cease and terminate any ongoing solicitation, encouragement, discussions or negotiations with any person (other than Mars and its subsidiaries, including Acquiror and their respective representatives) with respect to a Company Takeover Proposal (as defined below) and (ii) not, directly or indirectly:

 

•

solicit, initiate, knowingly encourage or knowingly facilitate any inquiries regarding, or the making of any proposal or offer that constitutes, or would reasonably be expected to lead to, a Company Takeover Proposal;

 

•

engage in, continue or otherwise participate in any discussions or negotiations regarding, or furnish to any other person any non-public information with the intent of inducing the making of, or knowingly encouraging or knowingly facilitating, a Company Takeover Proposal, other than (A) solely in response to an unsolicited inquiry to refer the inquiring person to the non-solicitation provisions of the Merger Agreement and to limit its communication exclusively to such referral or (B) upon receipt of a bona fide, unsolicited written Company Takeover Proposal that did not result from a material breach of the non-solicitation provisions of the Merger Agreement solely to the extent necessary to ascertain facts or clarify terms in order for the Board to have sufficient information to determine whether such Company Takeover Proposal is or could reasonably be expected to lead to a Company Superior Proposal (as defined below);

 

•

approve, adopt, publicly recommend or enter into, or publicly propose to approve, adopt, recommend or enter into, any letter of intent or similar document, agreement, commitment, or agreement in principle (whether written or oral, binding or nonbinding) with respect to a Company Takeover Proposal (other than to enter into a confidentiality agreement in accordance with the terms of the Merger Agreement);

 

•

take any action to make the provisions of any “fair price,” “moratorium,” “control share acquisition,” “business combination” or other similar anti-takeover statute or regulation (including any transaction under, or a third party becoming an “interested stockholder” under, Section 203 of the DGCL) inapplicable to any person (other than Acquiror and its affiliates) or to any transactions constituting or contemplated by a Company Takeover Proposal; or

 

•

resolve or agree to do any of the foregoing.

Under the Merger Agreement, a “Company Takeover Proposal” means any proposal or offer from any person (other than Mars or any of its subsidiaries) with respect to, or that would reasonably be expected to lead to, in a single transaction or a series of related transactions, (i) a merger, consolidation, business combination, recapitalization, binding share exchange, liquidation, dissolution, joint venture or other similar transaction involving Kellanova or any of its subsidiaries that if consummated would result in any person (or the

 

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stockholders of such person) beneficially owning 20% or more of the outstanding Common Stock or securities representing 20% or more of the voting power of Kellanova, (ii) any acquisition of 20% or more of the outstanding Common Stock (or securities representing 20% or more of the voting power of Kellanova), (iii) any acquisition (including the acquisition of stock of any subsidiary of Kellanova) of assets or businesses of Kellanova or its subsidiaries, including pursuant to a joint venture, representing 20% or more of the consolidated assets, revenues or net income of Kellanova, (iv) any tender offer or exchange offer that if consummated would result in any person beneficially owning 20% or more of the outstanding Common Stock (or securities representing 20% or more of the voting power of Kellanova) or (v) any combination of the foregoing types of transactions if the sum of the percentage of consolidated assets, consolidated revenues or earnings and Common Stock (or voting power of securities of Kellanova other than Common Stock) involved is 20% or more.

Receipt of Company Takeover Proposal

If (i) at any time after the date of the Merger Agreement and prior to the receipt of approval of the transactions by Kellanova’s shareowners (but not after), Kellanova or any of its representatives receives a bona fide, unsolicited written Company Takeover Proposal that did not result from a material breach of the non-solicitation provisions of the Merger Agreement and (ii) the Board determines, in good faith, after consultation with its outside financial advisors and outside legal counsel, that such Company Takeover Proposal constitutes or could reasonably be expected to result in a Company Superior Proposal (as defined below), then Kellanova and its representatives may, prior to the time of receipt of approval of the transactions by Kellanova’s shareowners, but not after:

 

•

furnish, pursuant to a confidentiality agreement that contains provisions that are no less favorable to Kellanova than the confidentiality agreement between Kellanova and Mars, information with respect to Kellanova to the party making such Company Takeover Proposal and its representatives; provided, that, to the extent permitted by law, Kellanova must substantially concurrently provide to Acquiror any such information that is non-public; and

 

•

engage in discussions or negotiations with such party regarding such Company Takeover Proposal.

Under the Merger Agreement, a “Company Superior Proposal” means a bona fide, unsolicited written Company Takeover Proposal (i) that if consummated would result in a third party (or the stockholders of such third party) acquiring, directly or indirectly, more than 50% of the outstanding Common Stock or more than 50% of the assets of Kellanova and its subsidiaries, taken as a whole, and (ii) that the Board determines in good faith (in accordance with the Merger Agreement), after consultation with its outside financial advisors and outside legal counsel, taking into account the timing and likelihood of consummation relative to the transactions, and after giving effect to any changes to the Merger Agreement proposed by Acquiror in response to such Company Takeover Proposal (in accordance with the Merger Agreement) and all other financial, legal, regulatory, tax and other aspects of such Company Takeover Proposal, including all conditions contained therein and the person making such Company Takeover Proposal, as the Board deems relevant, is more favorable from a financial standpoint to Kellanova shareowners than the Merger.

Notice of Company Takeover Proposal

Under the terms of the Merger Agreement, Kellanova must (i) as promptly as practicable (and in any event within 48 hours after receipt) notify Acquiror of the receipt of any Company Takeover Proposal or a request for information relating to Kellanova or its subsidiaries that constitutes or contemplates a Company Takeover Proposal, including the identity of the person making such Company Takeover Proposal and a description of the material terms and conditions thereof and (ii) keep Acquiror reasonably informed, on a reasonably current basis, as to the status of the Company Takeover Proposal including any developments, discussions or negotiations and providing to Acquiror a description of any changes to the material terms and conditions in respect thereof.

 

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The Company Recommendation; Adverse Recommendation Change; Fiduciary Exception

As described above in the section of this proxy statement entitled “The Merger —Recommendation of the Board and Its Reasons for the Merger,” and subject to the provisions described below, the Board has unanimously made the recommendation that Kellanova shareowners vote “FOR” the proposal to approve the adoption of the Merger Agreement and the transactions contemplated thereby, including, without limitation, the Merger, which unanimous recommendation we refer to as the “Company Recommendation.” The Merger Agreement provides that the Board will not effect an “Adverse Recommendation Change” (as described below) except as defined below.

Under the Merger Agreement, generally, the Board may not: (i) (A) fail to include the Company Recommendation in this proxy statement; (B) change, qualify, withhold, withdraw or modify, or authorize or publicly propose to change, qualify, withhold, withdraw or modify, in a manner adverse to Acquiror, the Company Recommendation; or (C) adopt, approve or recommend to Kellanova shareowners, or resolve to or publicly propose or announce its intention to adopt, approve or recommend to Kellanova shareowners, a Company Takeover Proposal (any action described in (i) being referred to as an “Adverse Recommendation Change”) or (ii) authorize, cause or permit Kellanova or any of its subsidiaries to enter into any letter of intent, memorandum of understanding, agreement (including an acquisition agreement, merger agreement, joint venture agreement or other agreement), commitment or agreement in principle with respect to any such Company Takeover Proposal (other than a confidentiality agreement entered into in accordance with the Merger Agreement).

The Board may, prior to receipt of approval of the transactions by Kellanova’s shareowners (but not after):

 

•

with respect to a bona fide, unsolicited Company Takeover Proposal that did not result from a breach of the non-solicitation provisions of the Merger Agreement, make an Adverse Recommendation Change or cause Kellanova to terminate the Merger Agreement in order to substantially concurrently with such termination enter into a definitive agreement relating to such Company Takeover Proposal if and only if, prior to taking either such action, (i) Kellanova has complied, in all material respects, with its obligations under the non-solicitation provision of the Merger Agreement (including the notice obligations to Acquiror described below), (ii) the Board has determined in good faith, after consultation with its outside financial advisors and outside legal counsel, that the Company Takeover Proposal constitutes a Company Superior Proposal and (iii) the Board determines in good faith (after consultation with its outside financial advisors and outside legal counsel) that the failure to do so would reasonably be expected to be inconsistent with its fiduciary duties under applicable law; and

 

•

make an Adverse Recommendation Change in response to a “Company Intervening Event” which is defined as any fact, circumstance, occurrence, event, development, change or condition or combination thereof (other than (x) the fact that Kellanova meets or exceeds any internal or published projections, forecasts, estimates or predictions of revenue, earnings or other financial or operating metrics for any period, any changes after the date of the Merger Agreement in the market price or trading volume of Common Stock (provided that the underlying causes of such fact, to the extent not otherwise excluded from this definition of “Company Intervening Event,” may be taken into account in determining the existence of a Company Intervening Event), or (y) any reasonably foreseeable consequence of the announcement of the Merger Agreement) that was not known to or reasonably expected by the Board as of or prior to the date of the Merger Agreement (or if known or reasonably expected, the consequences of which were not reasonably foreseeable as of or prior to the date of the Merger Agreement) and is unrelated to any Company Takeover Proposal or expected receipt of a Company Takeover Proposal, which we refer to as an “Intervening Event Recommendation Change,” if (i) Kellanova has complied, in all material respects, with its obligations under the non-solicitation provisions of the Merger Agreement (including the notice obligations to Acquiror described below) and (ii) the Board has determined, in good faith, after consultation with its outside financial advisors and outside legal counsel, that the failure to take such action would reasonably be expected to be inconsistent with its fiduciary duties under applicable law.

 

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Prior to making any such Adverse Recommendation Change, effecting any such termination or making any such Intervening Event Recommendation Change, (i) Kellanova must give Acquiror at least five business days’ prior notice of its intention to do so, the reasons therefor, and certain information related thereto, (ii) Kellanova must negotiate in good faith with Acquiror and its representatives to enable Acquiror to propose revisions to the terms of the Merger Agreement, and (iii) the Board must consider in good faith any revisions to the terms of the Merger Agreement proposed in writing by Acquiror (and not revoked) and determine in good faith after consultation with its outside financial advisors and outside legal counsel, either that the Company Takeover Proposal continues to constitute a Company Takeover Proposal if the revisions proposed by Acquiror were to be given effect, or that the failure to make an Intervening Event Recommendation Change would reasonably be expected to be inconsistent with the Board’s fiduciary duties under applicable law, as the case may be. Further, in the event of any change to the financial terms or other material terms of such Company Takeover Proposal, Kellanova must give a new notice to Acquiror consistent with that described in clause (i) above and a new notice period under clause (i) above will commence, except that the five business day notice period will instead be the longer of three business days and the period remaining under the original notice period immediately prior to the delivery of such additional notice. Kellanova is not permitted to terminate the Merger Agreement under these provisions with respect to a Company Superior Proposal unless Kellanova pays Acquiror the Termination Fee (which is described in more detail in the section entitled “—Termination Fee” beginning on page 104) prior to or concurrently with such termination.

Access to Information

Subject to certain exceptions and limitations, Kellanova will, and will cause its subsidiaries to (i) afford Acquiror and its representatives reasonable access during normal business hours, upon reasonable advance notice, to Kellanova’s and its subsidiaries’ personnel, properties, contracts, commitments, books and records (including tax returns), and (ii) make available to Acquiror such other available information concerning its business, properties and personnel as Acquiror may reasonably request for the purpose of consummating the transactions, reasonable integration planning or filing any tax return required to be filed in connection with or the result of the transactions and will instruct Kellanova’s (and its subsidiaries’) independent accountants to provide access to their work papers and such other information (including tax returns and drafts of any U.S. federal income tax returns or other material state or non-U.S. income tax returns) as Acquiror may reasonably request. Kellanova will not be required to provide access to or make available, in each case of (i) and (ii) above, to any person any information if (x) doing so would, in Kellanova’s and its outside counsel’s reasonable judgment, violate any law or contract or give rise to a material risk of jeopardizing the attorney-client privilege, or result in the disclosure of any trade secrets; provided, that Kellanova informs Acquiror of the general nature of such information and reasonably cooperates with Acquiror to share the information in such a manner that would not result in the violation of law or contract or loss or waiver of such privilege or the disclosure of any trade secret, or (y) such documents or information are reasonably pertinent to any adverse legal proceeding between Kellanova and its affiliates, on the one hand, and Mars and its affiliate, on the other hand. Any access or investigation must be conducted so as not to interfere unreasonably with the business and operations of Kellanova or any of its subsidiaries and will not extend to or include any sampling or testing of environmental media. No investigation by Acquiror or its representatives will affect or be deemed to modify or waive the representations and warranties of Kellanova set forth in the Merger Agreement.

Except as prohibited by law, prior to the Closing Kellanova will, and will cause its subsidiaries and their respective representatives to, use commercially reasonable efforts to (i) as promptly as reasonably practicable after the date of the Merger Agreement provide to Acquiror any contract of Kellanova and its subsidiaries for the procurement of goods and services with consideration payable by Kellanova or any its subsidiaries of more than $25 million in the twelve months ended August 1, 2024 or in any single fiscal year thereafter as may be reasonably requested by Acquiror, (ii) as promptly as reasonably practicable after the date of the Merger Agreement, provide to Acquiror a copy of the primary loan agreement, credit agreement, note, debenture, bond or indenture, in each case, as in effect on the date of the Merger Agreement, pursuant to which any indebtedness for borrowed money of Kellanova or any of its subsidiaries may be incurred or is outstanding

 

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with a principal amount then-outstanding or commitments thereunder that is individually greater than $100 million as of the date of the Merger Agreement, in each case, to the extent not previously provided to Acquiror prior to the date of the Merger Agreement and (iii) cooperate with any reasonable due diligence request and process regarding such contracts as reasonably requested by Acquiror as contemplated by the previous paragraph.

Indemnification, Exculpation and Insurance

All rights to indemnification and exculpation from liabilities for acts or omissions occurring at or prior to the Effective Time, and any rights to advancement of expenses in favor of the Company Indemnified Parties, as provided in the organizational documents of Kellanova or its subsidiaries existing as of the date of the Merger Agreement or any indemnification agreements existing as of such date will survive the Merger and will not be amended, repealed or otherwise modified for a period of six years from and after the Effective Time in any manner that would adversely affect the rights thereunder with respect to acts or omissions occurring at or prior to the Effective Time of the Company Indemnified Parties except to the extent required by applicable law. From and after the Effective Time, Acquiror will cause the Surviving Corporation and its subsidiaries to honor these obligations.

Prior to the Effective Time, at Kellanova’s option, Kellanova will, or, if Kellanova does not, Acquiror will cause the Surviving Corporation to, obtain and fully pay the premium for the non-cancelable extension of the Kellanova’s existing directors’ and officers’ insurance policies and Kellanova’s existing fiduciary liability insurance policies with respect to acts or omissions occurring at or prior to the Effective Time and for a claims reporting or discovery period of at least six years from and after the Effective Time; provided that Kellanova (or the Surviving Corporation) will not pay an amount for such new insurance in excess of 300% of the aggregate annual premium currently paid by Kellanova for such policies. If such policies have been obtained by either Kellanova or the Surviving Corporation prior to or as of the Effective Time, Acquiror will cause such policies to be maintained in full force and effect, for their full term, and cause all obligations thereunder to be honored by the Surviving Corporation. If such policies are not obtained as of the Effective Time, then the Surviving Corporation is required to maintain in effect, for a period of not less than six years, Kellanova’s current directors’ and officers’ fiduciary liability insurance policies or a comparable policy, subject to certain limitations and minimum standards.

Efforts to Complete the Merger; Regulatory Approvals

The Merger Agreement provides that Kellanova, Acquiror and Merger Sub will (and will cause their respective affiliates to, if applicable) each use their respective reasonable best efforts to:

 

•

promptly submit all notifications to and obtain all clearances, authorizations, consents, orders and approvals of all governmental entities that may be, or become necessary for execution and delivery of, and the performance of obligations pursuant to, the Merger Agreement;

 

•

cooperate fully in promptly submitting all notifications and seeking to obtain all such clearances, authorizations, consents, orders and approvals; and

 

•

provide any other information any governmental entity may reasonably request in connection with the Merger Agreement (including requests for additional information or materials under the Antitrust Laws) as promptly as reasonably practicable.

Under the Merger Agreement, each party is required to (i) promptly, and in no event later than the date that is 10 business days after the date of the Merger Agreement (or such other date determined by Acquiror reasonably and in good faith), make its respective filings pursuant to the HSR Act and (ii) as promptly as practicable, make its respective filings and notifications (initially in draft form where customary), if any, under

 

96

any other applicable Antitrust Law, and, in each case, to supply to the appropriate governmental entities as promptly as practicable any additional information and documentary materials as may be requested.

Acquiror and Kellanova (if requested by Acquiror) have agreed to use their respective reasonable best efforts to avoid or eliminate any impediment under any Antitrust Law that may be asserted by any antitrust or competition governmental entity, so as to enable the parties to close the Merger as promptly as practicable, including (subject to the next paragraph):

 

•

proposing, negotiating, committing to and effecting, the sale, divestiture or disposition of such of its assets, properties or businesses or of the assets, properties or businesses to be acquired by it pursuant to the Merger Agreement;

 

•

entering into such other arrangements as are necessary or advisable to avoid the entry of, or to have vacated, lifted, reversed or overturned any decree, judgment, injunction or other order, that would prevent the consummation of the Merger; and

 

•

contesting and defending on the merits any claim asserted by a governmental entity in order to avoid the entry of, or to have vacated or terminated, any decree, order or judgment that would prevent the Closing.

Under the HSR Act and related rules, certain transactions, including the Merger, may not be completed until required information and materials are furnished to the Antitrust Division and the FTC and statutory waiting period requirements have been satisfied. Following the filing by Kellanova and Acquiror of their respective Notification and Report Forms, the waiting period under the HSR Act is expected to expire on thirty days later unless earlier terminated or extended by the issuance of a Second Request to the parties by the FTC or the Antitrust Division prior to that time. If the FTC or the Antitrust Division issues a Second Request, the waiting period with respect to the Merger will be extended for an additional period of 30 calendar days following both parties’ substantial compliance with that request unless earlier terminated by the FTC or the Antitrust Division. After that time, the waiting period may be extended only by court order or with the consent of the parties. At any time before or after the consummation of any such transactions, the FTC or the Antitrust Division could take such action under the Antitrust Laws of the United States as it deems necessary or desirable in the public interest, including seeking to enjoin the Merger.

Acquiror and Kellanova have agreed that Acquiror will control and direct the parties’ filings (including filing timing), strategies, processes, negotiation of settlements (if any) and related proceedings to obtain regulatory approvals (and Acquiror shall consult with and consider in good faith Kellanova’s views with regard thereto).

However, none of Mars, Acquiror, Merger Sub or any other subsidiary of Mars will be required to, and Kellanova and its subsidiaries will not without the prior written consent of Mars, take any action, or commit to take any action, or agree to any condition or limitation contemplated in the antitrust covenant of the Merger Agreement (i) that is not conditioned upon the consummation of the Merger, (ii) with respect to any of Mars’, Acquiror’s or their respective subsidiaries operations, divisions, businesses, product lines, contracts, licenses, relationships, contractual rights or obligations, customers or assets or (iii) that would result in, or would be reasonably likely to result in, the sale, divestiture or disposition of assets, properties or businesses of Kellanova or any of its subsidiaries and/or the termination of any business (in any jurisdictions(s)) of Kellanova or any of its subsidiaries that generated more than $750 million of annual consolidated revenues of Kellanova and its subsidiaries during the 12-month period ending as of December 31, 2023 (each of (i), (ii) or (iii), a “Burdensome Condition”).

Mars, Kellanova and their respective subsidiaries (including Acquiror and Merger Sub) have agreed not to, prior to the Closing, acquire, or agree to acquire, any businesses, assets or securities of a third party if such acquisition would, or would reasonably be expected to, prevent or materially delay the obtaining of necessary regulatory approvals.

 

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Employee Matters

For a period of at least 12 months following the Effective Time (or, if earlier, the date of termination of the applicable continuing employee), Acquiror or the Surviving Corporation must provide each employee of Kellanova or any of its subsidiaries who continues as of the Effective Time to be employed by Acquiror, the Surviving Corporation or any affiliate (which we refer to herein as “continuing employees”) with (i) at least the same level of base salary or hourly wage rate and target annual short-term cash incentive opportunities at rates that, in each case, were provided to such continuing employee immediately prior to the Effective Time, (ii) employee benefits (including employee car, transit and housing allowances provided in the ordinary course of business consistent with past practice, employee leave policies and arrangements, post-retirement medical benefits and 401(k) matching and contribution levels, but excluding all cash and equity incentive compensation, benefits under an ESPP, executive corporate aircraft policy, severance, defined benefit pension plans and change in control, retention or other similar non-reoccurring compensation arrangements) that are substantially comparable in the aggregate to those provided to such continuing employee by Kellanova and any of its subsidiaries immediately prior to the Effective Time (subject to the exclusions described above), (iii) no less favorable severance payments and benefits and garden leave and/or notice requirements (excluding any treatment in respect of equity awards granted after the Closing) to those that would have been provided to such continuing employee prior to the Effective Time consistent with the terms of the applicable benefit plan (provided that the calculation of such severance benefits including certain employee allowances is taken into account in a manner that is consistent with past practices prior to the Closing) and (iv) no less favorable target long-term incentive opportunities to those provided to such continuing employee by Kellanova or any of its subsidiaries immediately prior to the Effective Time.

To the extent unpaid as of the Closing Date, in respect of each Kellanova employee’s annual bonus for the calendar year prior to the calendar year in which the Closing occurs (referred to herein as the “prior year annual bonus”), Acquiror will, or will cause the Surviving Corporation to, pay to each continuing employee such prior year annual bonus in the ordinary course consistent with past practice for paying prior year annual bonuses (including for employees who experience an involuntary termination without “cause” following the end of the applicable calendar year but prior to the applicable payment date). In respect of each continuing employee’s annual bonus for the calendar year in which the Closing occurs (referred to herein as the “closing year annual bonus”), Acquiror will, or will cause the Surviving Corporation to, pay to each continuing employee such closing year annual bonus in an amount no less than the product obtained by multiplying (1) such continuing employee’s full bonus entitlement under the applicable benefit plan, assuming the greater of (A) target performance for all company performance goals, and (B) actual performance, extrapolated through the end of the applicable calendar year based on actual performance through the Closing Date, as determined in good faith by the Compensation and Talent Management Committee of the Board prior to the Closing Date, by (2) a fraction, the numerator of which equals the number of days that have elapsed from the first day of the calendar year in which the Closing occurs through the Closing Date and the denominator of which equals the total number of calendar days in such calendar year. The closing year annual bonus payment will be payable at the same time that annual bonuses would have been paid absent the Merger, subject to the continuing employee’s continued employment with Kellanova or its affiliates though the applicable payment date, unless the continuing employee’s employment is terminated due to an early qualifying termination. If any continuing employee experiences a qualifying termination of employment prior to the payment of his or her closing year annual bonus, such terminated continuing employee will be entitled to receive his or her closing year annual bonus, payable at the same time that the annual bonus would have been paid absent the qualifying termination of employment or, if greater, the payment that such continuing employee would otherwise be entitled in respect of the closing year annual bonus under the severance benefits protections described in the first paragraph of this section, subject to execution of a general release of claims.

At the Effective Time, each continuing employee will be given service credit for all purposes, including for eligibility to participate, benefit levels and eligibility for vesting under Acquiror employee benefit plans with respect to his or her length of service with Kellanova (and its subsidiaries and predecessors) prior to

 

98

the Closing, provided that in no event will any continuing employee be given service credit that would result in the duplication of benefits and no service credit will be recognized with respect to benefit accruals under any defined benefit pension plan or for any purpose under any post-employment health or welfare benefit plan.

After the Effective Time, Acquiror will use its reasonable best efforts to cause each continuing employee to be immediately eligible to participate in all Acquiror benefit plans to the extent coverage under such benefit plans replaces coverage under a comparable benefit plan of Kellanova in which such continuing employee participated immediately before the Effective Time and, for purposes of each Acquiror benefit plan providing medical, dental, pharmaceutical and/or vision benefits to any continuing employee and his or her covered dependents, cause all pre-existing condition limitations, exclusions, waiting periods and actively at work requirements of such Acquiror benefit plan to be waived to the extent such limitations, exclusions, waiting periods and actively at work requirements were waived or satisfied under the comparable benefit plan of Kellanova and recognize any eligible expenses incurred under a benefit plan of Kellanova during the portion of the plan year prior to the date such continuing employee becomes eligible to participate in such Acquiror’s benefit plan to be taken into account under such Acquiror benefit plan for purposes of satisfying all deductible, co-insurance, co-payment and maximum out of pocket requirements for the applicable plan year as if such amounts had been paid in accordance with such benefit plan of Kellanova.

With respect to continuing employees covered by a collective bargaining agreement, the terms and conditions of employment for those continuing employees will be governed by the applicable collective bargaining agreement until the expiration, modification or termination of such collective bargaining agreement in accordance with its terms or applicable law.

Company Special Meeting

Kellanova has agreed to duly give notice of, convene and hold a meeting of Kellanova shareowners for the purpose of voting upon the Merger Proposal as promptly as practicable following resolution of any SEC comments with respect to this proxy statement (which Kellanova was required to use its reasonable best efforts to file within 30 days of the date of the Merger Agreement). Subject to certain exceptions permitting a delay, Kellanova must hold a meeting of Kellanova shareowners for the purpose of voting on the Merger Proposal on or around the 20th business day following the commencement of the mailing of this proxy statement to Kellanova shareowners.

Tax Matters

At the Closing, Kellanova and Acquiror will each use their respective reasonable best efforts to obtain an opinion of Acquiror Tax Counsel (as defined in the section entitled “The Merger Agreement—Conditions to Consummation of the Merger”) addressed to Acquiror to the effect that, based upon certain facts, assumptions and representations, and subject to certain qualifications and limitations, for U.S. federal income tax purposes, the Merger will not affect the qualification of (i) the Contribution and Distribution, each as defined in the Separation and Distribution Agreement, dated as of September 29, 2023, by and between Kellanova and WK Kellogg Co (the “Separation and Distribution Agreement”), as qualifying for non-recognition of gain or loss to Kellanova pursuant to Sections 368, 355 and 361 of the Code, and (ii) the Distribution (as defined in the Separation and Distribution Agreement) as qualifying for non-recognition of income, gain, or loss to Kellanova’s shareowners pursuant to Section 355 of the Code, except to the extent of cash received in lieu of fractional shares (referred to as the “Closing Tax Opinion”).

Treatment of Certain Indebtedness

Kellanova will, and will cause its subsidiaries to, deliver all notices and take all other actions reasonably requested by Acquiror that are required to, in accordance with the terms thereof, terminate all commitments outstanding under the Credit Agreements, repay in full all obligations, if any, outstanding

 

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thereunder, and facilitate the release of all liens, if any, securing such obligations, and the release of all guarantees, if any, in connection therewith, in each case, as of the Effective Time.

Mars, Acquiror or any of their affiliates may, or may request Kellanova to, in which case Kellanova will use its reasonable best efforts, commence as promptly as practicable following receipt of such request, one or more consent solicitations regarding certain proposed amendments to the Indentures as reasonably requested by Mars, including to eliminate, waive or amend the change of control provisions and to amend the reporting covenants in the Indentures. Upon receipt of the requisite consents, Kellanova will execute a supplemental indenture to each applicable Indenture reflecting the terms of such consent solicitation.

Kellanova will, and will cause its subsidiaries to, and will use reasonable best efforts to cause its and its subsidiaries’ respective representatives to, use its and their respective reasonable best efforts to provide all cooperation reasonably requested by Mars or Acquiror in connection with the commencement and conduct of any consent solicitation described in the preceding paragraph, or any exchange offer to exchange all or a portion of Kellanova’s outstanding notes for securities of Mars, including assistance with the preparation of one or more offering memorandums, offers to purchase and consent solicitation statements, letters of transmittal and consents (if required) and press releases. Any documents (including all amendments or supplements thereto) and all mailings to the holders of Kellanova’s notes in connection with any such consent solicitation conducted by Kellanova will be subject to the prior review of, and comment by, Kellanova and Acquiror and shall be reasonably acceptable in form and substance to each of them. If at any time prior to the completion of any such exchange offer, any information should be discovered by Acquiror or Kellanova that Acquiror or Kellanova reasonably believes should be set forth in an amendment or supplement to the documentation relating thereto, so that such documentation shall not contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary in order to make the statements therein, in light of circumstances under which they are made, not misleading, the party that discovers such information will promptly notify the other parties, and an appropriate amendment or supplement prepared by Acquiror (or at the reasonable request of Acquiror, prepared by Kellanova) describing such information (which amendment or supplement shall be reasonably satisfactory in form and substance to Acquiror) will be disseminated to the holders of the applicable Kellanova notes.

At or prior to the Effective Time, Acquiror will provide (or cause to be provided) to Kellanova funds in an amount equal to the consent fee payable in connection with any consent solicitation pursuant to the foregoing. Acquiror will, promptly upon written request by Kellanova, (i) reimburse Kellanova for all reasonable and documented out-of-pocket costs and expenses incurred by Kellanova or any of its subsidiaries in connection with the cooperation of Kellanova and its subsidiaries and (ii) indemnify, defend and hold harmless Kellanova and its subsidiaries and their respective representatives from any liability arising out of the contemplated financing transactions and any information used in connection therewith (subject to certain customary exceptions).

Financing Covenants and Obligations

Kellanova will use its reasonable best efforts, and will cause its subsidiaries to use their respective reasonable best efforts, to provide, and Kellanova and its subsidiaries will use their respective reasonable best efforts to cause each of their respective representatives to provide, at Acquiror’s sole cost and expense, to Mars, Acquiror and its affiliates all customary cooperation that may be reasonably requested by Mars or Acquiror (including reasonable requests of the debt financing sources) to assist Mars, Acquiror and its affiliates in arranging, obtaining, syndicating and consummating debt financing for the transaction (or any issuance, sale or offering of debt securities and/or delayed draw term loans, in each case, in lieu thereof) or any exchange offer to exchange all or a portion of Kellanova’s outstanding notes for securities of Mars. Mars and Acquiror may share confidential information with respect to the businesses of Kellanova and its subsidiaries with the debt financing sources in connection with any marketing efforts for the financing.

 

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Acquiror will, promptly upon written request by Kellanova, (i) reimburse Kellanova for all reasonable and documented out-of-pocket costs and expenses incurred by Kellanova and its subsidiaries and its and their respective representatives in connection with the foregoing paragraph and (ii) indemnify, defend and hold harmless Kellanova and its subsidiaries and their respective representatives against any liability or arising out of the arrangement of such financing or providing any of the information utilized in connection therewith (subject to certain customary exceptions).

Each of Acquiror and Mars will, and will cause their applicable subsidiaries to, use reasonable best efforts to obtain financing on or prior to the Closing in an amount, when taken together with available cash on hand and other sources of funds available to Mars and Acquiror, to consummate the transactions. Acquiror will keep Kellanova informed on a reasonably current basis and in reasonable detail of the status of its efforts to arrange such financing. If all or any portion of such financing becomes unavailable, Acquiror shall (i) notify as soon as reasonably practicable (and in any event within three business days) to Kellanova of such event and (ii) use its reasonable best efforts to obtain, on or prior to the Closing, the alternative financing from the same or alternative sources, which may include one or more of a loan financing, an offering and sale of notes, or any other financing or offer and sale of other debt securities, or any combination thereof, in an amount sufficient when taken together with available cash on hand and other sources of funds available to Mars and Acquiror, to consummate the transactions; provided that in no event will the “reasonable best efforts” of Mars, Acquiror or any of their subsidiaries be deemed or construed to require, Mars, Acquiror or any such subsidiary to seek or accept such alternative financing on terms materially less favorable in the aggregate than the terms and conditions described in the Debt Commitment Letter, as determined in the reasonable judgement of Acquiror.

Certain Additional Covenants

The Merger Agreement also contains additional covenants, including, among others, covenants relating to the filing of this proxy statement, covenants relating to regulatory filings and approvals (which are described in the section entitled “The Merger (Proposal 1)—Regulatory Approvals” beginning on page 81), reporting requirements under Section 16 of the Exchange Act, certain takeover matters, coordination with respect to litigation relating to the Merger, public announcements with respect to the transactions and notification regarding certain matters.

Conditions to Consummation of the Merger

Each party’s obligation to effect the Merger is subject to the fulfillment on or prior to the Closing Date, or waiver (to the extent not prohibited under applicable law) at Closing, of each of the following conditions:

 

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the adoption of the Merger Agreement by the affirmative vote of the holders of a majority of the issued and outstanding shares of Common Stock;

 

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the absence of any Legal Restraint; and

 

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the expiration or termination of the applicable waiting period under the HSR Act, and receipt of all other clearances or approvals under other applicable Antitrust Laws.

The obligations of Acquiror and Merger Sub to consummate the Merger are also subject to the fulfillment at or prior to the Closing Date or waiver (to the extent not prohibited under applicable law) at Closing, of each of the following conditions:

 

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the representations and warranties of Kellanova:

 

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regarding the capital structure of Kellanova being true and correct at and as of the date of the Merger Agreement and at and as of the Closing Date as though made at and as of the Closing Date (except that representations and warranties made as of a particular date or period need to be true and correct only as of such date or period), except for any de minimis inaccuracies;

 

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regarding certain aspects of Kellanova’s organization, good standing and qualification to do business, capital stock, corporate authority relative to the Merger Agreement and no violation thereof (with limited exceptions), opinions of Kellanova’s financial advisors, absence of broker’s and finder’s fees other than those described in the Merger Agreement and certain actions in respect of potentially applicable state anti-takeover statutes or regulations and any similar provisions in the Certificate of Incorporation or Bylaws shall be true and correct in all material respects both at and as of the date of this Agreement and at and as of the Closing Date as though made at and as of the Closing Date;

 

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regarding the absence of a “Company Material Adverse Effect” and certain other changes or events, being true and correct at and as of the date of the Merger Agreement; and

 

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other than the representations and warranties described in the bullets above, being true and correct at and as of the date of the Merger Agreement and at and as of the Closing Date as though made at and as of the Closing Date (except that representations and warranties made as of a particular date or period need to be true and correct only as of such date or period), other than for failures to be so true and correct (without regard to materiality, “Company Material Adverse Effect” and similar qualifiers contained in such representations and warranties) that would not, individually or in the aggregate, have or reasonably be expected to have a “Company Material Adverse Effect.”

 

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Kellanova having performed or complied with in all material respects all covenants required by the Merger Agreement to be performed or complied with by it prior to the Closing;

 

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no “Company Material Adverse Effect” having arisen or occurred following the date of the Merger Agreement that is continuing;

 

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Acquiror’s receipt of a certificate of Kellanova, dated as of the Closing Date, signed by its chief executive officer or another senior officer certifying the satisfaction of the foregoing three conditions;

 

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(i) no Burdensome Condition has been a condition to receipt of any regulatory approval, (ii) there is not in effect at or upon the Closing any order or law resulting, individually or in the aggregate, in a Burdensome Condition and (iii) no regulatory approval contains, includes or imposes any Burdensome Condition; and

 

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Acquiror’s receipt of the Closing Tax Opinion from Skadden, or, if Skadden is unable, or declines, to deliver the Closing Tax Opinion, from Kirkland & Ellis LLP (either, the “Acquiror Tax Counsel”), provided that Acquiror’s receipt of the Closing Tax Opinion from Acquiror Tax Counsel is not a condition to the consummation of the Merger to the extent that Acquiror Tax Counsel determines that it cannot render the Closing Tax Opinion for reasons other than as a result of material changes in law or facts prior to the Closing Date.

Kellanova’s obligation to effect the Merger is subject to the fulfillment at or prior to the Closing Date or waiver (to the extent not prohibited under applicable law) at Closing, of each of the following additional conditions:

 

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the representations and warranties of Acquiror and Merger Sub:

 

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regarding corporate existence and good standing, corporate authority relative to the Merger Agreement, and no violation thereof (with limited exceptions), being true and correct in all material respects at and as of the date of the Merger Agreement and at and as of the Closing Date as though made at and as of the Closing Date (except that representations and warranties made as of a particular date or period need to be true and correct only as of such date or period); and

 

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other than the representations and warranties described in the bullet above, being true and correct at and as of the date of the Merger Agreement and at and as of the Closing Date as though made at and as of the Closing Date, other than for failures to be so true and correct (without regard to materiality, “Acquiror Material Adverse Effect” and similar qualifiers contained in such

 

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representations and warranties) that would not, individually or in the aggregate, reasonably be expected to have an “Acquiror Material Adverse Effect”;

 

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Acquiror and Merger Sub having performed or complied with in all material respects all covenants required by the Merger Agreement to be performed or complied with by it prior to the Closing Date; and

 

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Kellanova’s receipt of a certificate of Acquiror, dated as of the Closing Date, signed by its chief executive officer or another senior officer certifying the satisfaction of the foregoing two conditions.

Termination

The Merger Agreement may be terminated and the Merger may be abandoned at any time prior to the Effective Time:

 

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by mutual written agreement of Kellanova and Acquiror;

 

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by either Kellanova or Acquiror:

 

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if the Merger is not consummated on or before the Outside Date; provided that if, on the Outside Date, the conditions to the Closing set forth in the Merger Agreement relating to (i) the absence of a Legal Restraint, (ii) the expiration of the waiting period applicable to the Merger under the HSR Act and the receipt of the clearances or approvals under applicable Antitrust Laws in the jurisdictions set forth on the specified Company Disclosure Schedule and (iii) the absence of a Burdensome Condition (in the case of each of clauses (i) through (iii), as it relates to an Antitrust Law) are not fulfilled but all other conditions to the Closing set forth in the Merger Agreement have been waived or fulfilled (other than those conditions that by their terms cannot be satisfied prior to the Closing, but which conditions would be satisfied if the Closing occurred on such date), then the Outside Date will be automatically extended by six months to February 13, 2026; provided, further, that if, on February 13, 2026, the conditions to the Closing set forth in the Merger Agreement relating to (i) the absence of a Legal Restraint, (ii) the expiration of the waiting period applicable to the Merger under the HSR Act and the receipt of the clearances or approvals under applicable Antitrust Laws in the jurisdictions set forth on the specified section of the Company Disclosure Schedule and (iii) the absence of a Burdensome Condition (in the case of each of clauses (i) through (iii), as it relates to an Antitrust Law) are not fulfilled but all other conditions to the Closing set forth in the Merger Agreement have been waived or fulfilled (other than those conditions that by their terms cannot be satisfied prior to the Closing, but which conditions would be satisfied if the Closing occurred on such date), then the Outside Date will again be extended by six months to August 13, 2026. However, the right to terminate the Merger Agreement pursuant to this bullet will not be available to any party if the failure of the Closing to have occurred on or before the Outside Date was primarily due to the failure of such party to perform any of its obligations under the Merger Agreement;

 

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if any Legal Restraint that has become final and non-appealable permanently restrains, enjoins or otherwise prohibits or makes illegal the consummation of the Merger. However, the party seeking to terminate the Merger Agreement pursuant to this bullet must comply in all material respects with its obligations under the Merger Agreement to contest, appeal and remove such Legal Restraint and the right to terminate the Merger Agreement pursuant to this bullet will not be available to any party if the issuance of the Legal Restraint or the occurrence of any such other action was primarily due to the failure of such party to perform any of its obligations under the Merger Agreement (which failure constitutes a material breach of the Merger Agreement); or

 

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if the required approval of the Merger Proposal at the Special Meeting (or any adjournment or postponement thereof) is not obtained at which a vote was taken on the matter.

 

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by Acquiror:

 

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if Kellanova has (i) breached any representation, warranty, covenant or other agreement contained in the Merger Agreement (other than an intentional and material breach of the non-solicitation provisions of the Merger Agreement), which breach would result in the failure to satisfy the closing conditions relating to Kellanova’s representations and warranties or covenants and (ii) such breach is not curable or, if curable, is not cured before the earlier of (A) the Outside Date or any extension thereof as applicable, and (B) 20 business days following Acquiror’s written notice to Kellanova. However, Acquiror will not have the right to terminate the Merger Agreement pursuant to this bullet if Acquiror is in breach of any representation, warranty, covenant or other agreement contained in the Merger Agreement (which breach would result in the failure to satisfy the closing conditions relating to Acquiror’s or Merger Sub’s representations and warranties or covenants); or

 

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(i) at any time following an Adverse Recommendation Change; or (ii) if Kellanova has intentionally and materially breached the non-solicitation provisions of the Merger Agreement. However, in each case, Acquiror’s right to terminate the Merger Agreement pursuant to this bullet will expire upon receipt of approval of the transactions by Kellanova’s shareowners.

 

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by Kellanova:

 

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if Acquiror or Merger Sub has (i) breached any representation, warranty, covenant or other agreement contained in the Merger Agreement, which breach would result in the failure to satisfy the closing conditions relating to Acquiror’s and Merger Sub’s representations and warranties or covenants and (ii) such breach is not curable or, if curable, is not cured by the earlier of (A) the Outside Date, or any extension thereof as applicable, and (B) 20 business days following Kellanova’s written notice to Acquiror. However, Kellanova will not have the right to terminate the Merger Agreement pursuant to this bullet if Kellanova is in breach of any representation, warranty, covenant or other agreement contained in the Merger Agreement (which breach would result in the failure to meet the closing conditions relating to Kellanova’s representations, warranties and covenants); or

 

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prior to the receipt of approval of the transactions by Kellanova’s shareowners, in order to substantially concurrently with such termination enter into a definitive agreement relating to a Company Superior Proposal to the extent permitted by and subject to the terms of the non-solicitation provision in the Merger Agreement, subject to the prior or concurrent payment of the Termination Fee to Acquiror.

Termination Fee

If the Merger Agreement is terminated in specified circumstances, Kellanova will be required to pay or cause to be paid to Acquiror a Termination Fee of $800,000,000.

Acquiror would be entitled to receive the Termination Fee from Kellanova if the Merger Agreement is terminated:

 

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(i) (A) by either Acquiror or Kellanova because (1) the Closing has not occurred by the Outside Date or any extension thereof as applicable, and approval of the transactions by Kellanova’s shareowners has not been obtained, (B) Acquiror or Kellanova terminates the Merger Agreement as a result of a failure to obtain approval of the transactions by Kellanova’s shareowners at the Special Meeting (or any adjournment or postponement thereof) at which a vote was taken on the matter or (C) Acquiror terminates the Merger Agreement because (1) Kellanova has breached a representation, warranty, covenant or other agreement in the Merger Agreement (other than an intentional and material breach of the non-solicitation provisions of the Merger Agreement), which breach would result in the failure to

 

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