Mars’ $36 Billion Kellanova Deal Clears US Hurdle, Faces EU Resistance

Published: 2025-06-26 04:28:41 ET K

Published on 06/26/2025 at 04:28

By Justin Emerson

Mars has secured US antitrust approval for its $36 billion acquisition of Pringles maker Kellanova, clearing a key regulatory hurdle. The Federal Trade Commission (FTC) said the merger did not meet the criteria for an anticompetitive transaction and announced an early termination of its review. The decision comes amid broader scrutiny under President Donald Trump’s administration, which has pledged to act decisively against anti-competitive practices while not obstructing deals that pose no legal breach.

Daniel Guarnera, Director of the Bureau of Competition, stated that once the agency concluded the deal didn’t violate American law, “our job is to get out of the way.”

Mars welcomed the decision, saying that aside from the EU, all regulatory approvals had been obtained, and it still expects the transaction to close towards the end of 2025. Kellanova declined to comment on the US decision.

Green light in Washington, red tape in Brussels

However, the EU's competition watchdog has launched a full investigation into the deal, citing concerns that the merger could inflate prices. The European Commission warned that Mars’ strengthened position in the market could pressure retailers into accepting higher prices, given the portfolio power both companies wield in several EU countries.

The Commission highlighted the potential for Mars to leverage its expanded product range - spanning from M&Ms and Snickers to Pringles - to command greater pricing authority. EU antitrust chief Teresa Ribera remarked that with food prices already elevated by inflation, it is crucial the acquisition does not add further pressure to household budgets.

Mars expressed disappointment at the EU’s move but remained “confident” about the deal’s eventual outcome, emphasising the complementary nature of the two companies’ portfolios and their potential to deliver greater consumer choice and innovation.

The European Commission has set a deadline of 31 October to deliver its decision, following its initial concerns reported earlier in June.

Retail unease and market shake-up

Retailers across Europe have expressed apprehension about the consolidation of such branded food power. The worry is not new: large-scale mergers in food and beverage have long raised red flags over market dominance, particularly in concentrated segments like breakfast cereals and snacks.

Analysts note that the combined Mars-Kellanova entity would control about 12% of the US snacking and confectionery market. While this still leaves significant competition from firms like PepsiCo, Kraft Heinz, Mondelez, and Hershey, Mars would see substantial expansion in its snacking footprint - by some estimates, 40% globally and 60% in the US.

Mars’ acquisition strategy aligns with its broader ambition to double its snacking business over the next decade. With brands such as Cheez-It, Eggo, and Rice Krispies joining its portfolio, the company is poised to leverage new capabilities across salty, sweet, and baked categories. The recent opening of a snacks-focused R&D hub in Chicago and a forthcoming facility in Utah underscore this momentum.

Mars has remained a private, family-owned company, for over a century. It now operates across four major divisions: Food, Pet Care, Wrigley (confectionery), and Edge, its health-focused innovation arm. While Mars has shown no public interest in going public, the scale and diversity of its empire continue to fuel speculation about a potential IPO.

Kellanova’s slipping performance adds pressure

Kellanova’s recent results offer context for its merger motivations. The company’s Q1 performance underwhelmed, with reported net sales falling 3.7% to $3.08 billion and adjusted EPS slipping to $0.90, below analyst expectations. Organic sales growth was modest at 0.7%, dragged down by weakening demand in North America and Europe.

Volume declines were especially acute in North America, where sales dropped 3.8% on the back of a softening snack and frozen food market. Europe fared similarly, down 1.8%. Only the AMEA region showed robust growth, posting a 16.9% rise in organic sales.

Jefferies analysts have concluded that Mars remains the most viable buyer, citing minimal category overlap and a clean all-cash transaction structure. They noted that other potential bidders such as Mondelez, General Mills, and Hershey face more complex financial and strategic hurdles.

For now, Mars waits on Brussels to complete the regulatory picture.

Justin Emerson