Mars yesterday (25 June) said it is “disappointed but optimistic” after the EU launched an in-depth probe of the US giant’s planned takeover of Kellanova.
The European Commission said it has “preliminary concerns” the transaction, which would bring together brands including Snickers and Pringles, could lead to higher prices for consumers.
Privately-owned snacks and confectionery giant Mars sealed a deal for Kellanova last August for $35.9bn but with the proviso the transaction would need to be approved by competition authorities.
In a statement, the Commission said its initial findings indicate the acquisition could increase Mars’ “bargaining power vis-à-vis retailers” in the European Economic Area, which includes the EU as well as Iceland, Liechtenstein, and Norway.
Brussels said the companies “each have a strong market position in several product markets in multiple member states”.
The Commission said several – unnamed – retailers had “raised concerns” about the prospect of Mars’ bargaining power if the company acquires Kellanova’s portfolio.
In a statement, Mars told Just Food, Investment Monitor's sister publication, the combination of the manufacturers’ “complementary footprints and portfolios will deliver more choice and innovation to consumers”.
It added: “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.”
Mars’ takeover of Kellanova, formerly part of Kellogg Company before a demerger of the business in 2023, would be one of the largest the packaged foods industry has seen in recent times, rivalling the 2015 merger of Kraft Foods and HJ Heinz.
The EU has until the end of October to make a decision on the proposed $36bn deal.
Mars said it now expects the transaction to close “towards the end of 2025” but it added: “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.”
The combination of Mars and Kellanova would create a business with annual sales revenue of at least $60bn and a product range that would house brands including Skittles confectionery and Special K cereal. The deal would cover the Kellogg’s range of cereals outside North America.
Mars also operates in pet food whereas its US peer does not. Plant-based foods, or Kellanova’s MorningStar Farms brand, would also come under the Mars’ umbrella.
Just Food has asked Mars if the company would consider offloading assets to secure EU approval for its move for Kellanova. At the time of publication, Mars had not commented.
“By acquiring Kellanova, Mars will add several very popular brands of potato chips and cereals to its already broad and strong product portfolio," Commission EVP Teresa Ribera said. "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 EEA."
