The European Commission has given the green light to Mars’ $35.9bn takeover of Kellanova.
In a statement, the Commission said it had “approved unconditionally” the deal after conducting an investigation into the proposed transaction, which was first announced in August last year.
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Six months ago, Brussels said it had “preliminary concerns” the deal, which would bring together brands including Snickers and Pringles, could lead to higher prices for consumers.
The Commission said then 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.
The deal was subsequently approved by competition regulators in the US with all eyes on the verdict from the Commission, which was announced today (8 December).
“The Commission’s investigation has confirmed indications that both Mars and Kellanova already enjoy a degree of market power in several product markets in multiple member states and that Mars and the merged entity would be in a position to link different product categories in negotiations with retailers,” the Commission said in today’s statement.
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By GlobalData“However, the evidence collected did not support a finding that the proposed transaction would increase Mars’ bargaining power vis-à-vis retailers.”
According to the Commission, adding Kellanova’s products to the Mars’ portfolio would not strengthen the Twix owner’s bargaining power with retailers because, Brussels said, they have a long shelf life and are usually the object of infrequent purchases.
The Commission added there was not the evidence to suggest shoppers had loyalty to both companies’ brands and would be more likely to switch retailers if the products were unavailable at their main store.
Mars and Kellanova now anticipate closing the transaction on Thursday subject to the “satisfaction or waiver of customary closing conditions”.
The merger means Kellanova’s portfolio of snacking brands, which includes Pringles and Pop-Tarts, and international cereal brands like Rice Krispies and Kellogg’s, will join Mars’ existing portfolio that includes Snickers, Twix and Skittles.
Andrew Clarke, global president of Mars said: “Today marks an extraordinary milestone and the culmination of years of work for many of our associates.”
He added: “We’ve said all along that Mars Snacking and Kellanova will be better together, building on the strength of our respective legacies and capabilities to unlock new possibilities and drive growth.”
Steve Cahillane, chairman, president and CEO of Kellanova, said: “This combination will bring together two purpose-driven and principles-led companies.
“Serving as Kellanova’s chairman, president and CEO has been a true honour and I’m looking forward to seeing Kellanova people and brands thrive as part of Mars Snacking.”
Mars’ takeover of Kellanova, formerly part of Kellogg Company 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.
