EU opens investigation into $35.9B Mars-Kellanova merger; FTC approves deal

Updated June 26

The European Union’s antitrust watchdog organization announced Wednesday that it has opened an in-depth investigation into McLean candy and pet care giant Mars’ proposed $35.9 billion acquisition of Kellanova, the producer of Cheez-It, Pop-Tarts, Pringles and Eggo.

“Preliminary investigation indicates that, by enlarging its product portfolio with the addition of Kellanova’s very popular brands, Mars could increase its bargaining power vis-à-vis retailers,” the European Commission said in its statement. “As a result, Mars could be in a position to use this increased leverage to, for example, extract higher prices during negotiations, which in turn would lead to higher prices for consumers.”

Retailers also have raised concerns about the privately held Mars’ bargaining power, the statement says. With this announcement, the commission now has 90 working days to conduct its probe, until Oct. 31, when it must make a decision about whether these competition concerns are valid.

Mars released a statement Wednesday voicing optimism that the deal will go forward, although it will be delayed from a previously announced closing in August to an expected conclusion at the end of the year.

“We remain confident the pending combination of Mars Snacking and Kellanova’s complementary footprints and portfolios will deliver more choice and innovation to consumers,” Mars said. “Today, the European Commission announced that it has opened a Phase II investigation into the transaction. We are disappointed yet remain optimistic that this investigation will be positively resolved.

“We have cooperated with the regulatory authorities, furnishing substantial supporting information, and will continue to do so.

“Based on the current status of the ongoing antitrust review by the European Commission, we now expect the transaction to close towards the end of 2025; however, the exact timing cannot be predicted with any certainty at this point. We look forward to delivering the benefits of the pending transaction to all Mars and Kellanova stakeholders.”

In positive news for the corporations, the U.S. Federal Trade Commission cleared the deal following an antitrust review, the FTC announced late Wednesday.

Mars CEO Poul Weihrauch issued the following statement: “We are very pleased that the FTC has completed its review of the transaction without the imposition of any condition or requiring any remedy. The transaction has now received all but one of the 28 required regulatory clearances, with only the review by the European Commission outstanding. This brings us one step closer to uniting two iconic businesses with complementary footprints and portfolios, allowing us to deliver more choice and innovation to consumers.”

The EU’s expected decision to conduct an in-depth probe was reported last week by Reuters, after Mars did not meet a June 18 deadline to submit remedies to the commission’s concerns about its high market share.

“By acquiring Kellanova, Mars will add several very popular brands of potato chips and cereals to its already broad and strong product portfolio,” said Teresa Ribera, a commissioner. “As inflation-hit food prices remain high across Europe, it is essential to ensure that this acquisition does not further drive up the cost of shopping baskets. Our in-depth investigation will assess the transaction’s impact on the price of these companies’ products for consumers in the [European Economic Area].”

According to the European Commission’s competition policy, following the Phase II investigation, the commission could conclude that the merger will impede competition. If that occurs, commissioners will send the companies a “statement of objections,” which the parties can respond to in writing.

After that, the commission can either approve the merger unconditionally or with certain remedies, which could include the selling off of certain brands, or it can prohibit the merger.

The European Commission notes that it works with the U.S. Federal Trade Commission and the U.S. Department of Justice on investigations, and all decisions by the commission are subject to review by the EU general court and the court of justice.

Mars, which produces M&M’s, Snickers and Twix, announced the all-cash deal in August 2024, which would bring Cheez-It, Pop-Tarts, Pringles, Eggo and other food products under Mars’ ownership. The publicly owned Kellanova was created in October 2023 when Kellogg split into two companies, with WK Kellogg Co. producing breakfast cereals and Kellanova manufacturing its snack brands.

Mars is Virginia’s largest privately held company and the fourth-largest in the United States. In recent years, it has made acquisitions in pet care and candy sectors in an effort to double its sales by 2033.