Crunch Time for Mars: EU Regulators Put $36 Billion Kellanova Deal Under the Microscope

Mars Inc.'s hostile $36 billion offer for Pringles owner Kellanova will be the subject of a full European Commission antitrust review, sources indicated. The move comes on the heels of rising concern in EU regulators that Mars already has a strong market position in some product categories in several European markets. Notably, Mars is not including any remedies or concessions in the initial phase of the review, up to June 25, 2025.

 

Key Points
In-Depth Investigation Imminent: The European Commission will soon launch a full-fledged investigation of Mars-Kellanova merger, which is feared to further solidify Mars' dominance of EU's largest snack and confectionery marketplaces.

 

No Early Remedies: Mars will not be proposing any remedies or divestitures during the first review, suggesting a bumpy regulatory ride.

 

Retailer Concerns: The European retailers have been adamant in their opposition, warning that the deal will give Mars disproportionate negotiating power and lead to restrictive practices in sectors like breakfast cereals, confectionery, and frozen desserts.

 

Market Reaction: The announcement of the investigation caused Kellanova shares to drop as much as 3.2% before recovering partially, indicating investor unease over potential regulatory problems.

 

Deal Timeline: The first review ends on June 25, and then the Commission can initiate a four-month investigation. The two firms had been anticipating a conclusion in August 2025, but the regulators' delays could leave it after that.

 

Industry Background: The deal comes amid a broader consolidation trend within the U.S. packaged food sector as firms seek scale to combat inflation and shifting consumer preferences.

 

Unless its problems are overcome, Mars may ultimately be compelled to sell holdings or make significant concessions in an attempt to secure approval of the megamerger.

 

Source: Reuters on MarketScreener, Investing.com, Bloomberg Law, FoodProcessing.com