Mars’ takeover of Kellanova faces another stumbling block as the EU has suspended an October deadline to approve the $35.9bn transaction.
Privately-owned US snacks and confectionery giant Mars announced the deal for the Pringles brand owner in August but with the proviso the transaction would need to be approved by competition authorities.
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While the deal was cleared in June by the US antitrust regulator – the Federal Trade Commission – EU authorities had expressed their initial concerns over the merger in May before launching an in-depth probe on 25 June.
The preliminary findings from the competition body of the European Commission, the EU’s executive arm, were that “the transaction could lead to higher prices for consumers due to Mars’ increased negotiating power towards retailers in the European Economic Area (EEA)”.
A 31 October deadline was then set by the EC to approve the deal based on feedback from Mars to allay any competition concerns.
But it seems a satisfactory response has not been forthcoming as the EC said via a spokesperson today (30 July) that it has “stopped the clock in its investigation”, effective from 28 July.
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By GlobalDataThe clock can be restarted, however, as soon as Mars satisfies the conditions set forth by the EC.
“The ‘clock’ in merger investigations can be suspended if the parties fail to provide, in a timely fashion, an important piece of information that the Commission has requested from them (for its competition assessment) within a prescribed deadline,” the EC spokesperson explained.
“Once the missing information is supplied by the parties, the clock is re-started and the legal deadline for the Commission’s decision is then adjusted accordingly.”
Just Food approached Mars for comment and to request some insight as to what is behind the delay, particularly when there was still three months to run before the October deadline passed. However, the company declined to comment.
On the day the full EC investigation was launched into the takeover of Kellanova, which also owns the Cheez-It and Pop-Tart brands, Mars said it was “disappointed but optimistic” over the probe decision.
Mars said at the time in a statement provided to Just Food that it expected the transaction to close “towards the end of 2025”.
The Maltesers confectionery maker said: “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.”
The EC said in June its “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”.
It added that, “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”.
In the EEA, which includes all the EU trading bloc members, along with Iceland, Liechtenstein, and Norway, the EC said “several retailers” had expressed concerns about the deal.
Mars’ takeover of Kellanova, formerly part of Kellogg before a demerger of the business in 2023, is one of the largest the packaged foods industry has seen in recent times, rivalling the 2015 merger of Kraft Foods and HJ Heinz.
The merger of Mars and Kellanova would create a business with annual sales revenue of at least $60bn. It surpasses the $23bn Mars paid for the Wrigley’s chewing gum business in 2008, which was supported by Warren Buffet’s Berkshire Hathaway, before the billionaire investor was bought out in 2016.
Meanwhile, the other half of the Kellogg spin-off – WK Kellogg – is in the midst of a $3.1bn takeover by another European confectionery giant, Italy-headquartered Ferrero. That deal, announced in June, will also be the subject of competition clearance.
