Aug 5 Reuters Shares of Pringles maker Kellanova surged more than 16 in trading before the bell on Monday, after a Reuters report said candy giant Mars was exploring a potential buyout of the company.

A deal between Mars and Kellanova, known for snacks brands such as Rice Krispies Treats and PopTarts, would be one of the biggest ever in the packaged food sector.

We believe that K39;s portfolio of popular snack brands will fit well with Mars39; and help them expand scale in international markets, TD Cowen analyst Robert Moskow said in a client note.

Kellanova39;s shares were trading at 73.33 premarket on Monday. The company had a market value of about 27 billion, including debt, as of Friday39;s close.

Sales growth at U.S. packaged food companies such as Kraft Heinz , Mondelez and Hershey have taken a hit as budgetstrapped customers save their dollars for essential purchases and hunt for cheaper, privatelabel alternatives to pricier branded items.

At times like this when growth slows, balance sheets are relatively clean, and valuations dip, the market leaders in food tend to look more closely at big combinations to drive cost synergies, TD Cowen39;s Moskow said.

Kellanova39;s forward pricetoearnings ratio for the next 12 months, a common benchmark for valuing stocks, was 16.50, compared with Hershey39;s 20.99 and Mondelez39;s 19.69.

Reporting by Savyata Mishra in Bengaluru; Editing by Devika Syamnath

Source Reuters