Mars has reportedly failed to allay the competition concerns of EU regulators over its $36bn takeover of US food business Kellanova.
Privately-owned snacks and confectionery giant Mars sealed the deal for the Pringles brand owner in August for $35.9bn but with the proviso the transaction would need to be approved by competition authorities.
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However, Reuters cited a document from the European Commission issued today (19 June) saying Mars had not provided ‘remedies’ to get the deal over the line by an 18 June deadline, raising speculation it could be required to divest assets from the takeover.
Unnamed sources for the news agency suggested yesterday the EC’s merger body was likely to launch an in-depth investigation into the merger following the end of its preliminary review on 25 June.
While the takeover falls under the jurisdiction of the US, both Mars and Kellanova operate globally, including in the EU. Kellanova owns the Cheez-It and Pop-Tart brands. Mars also operates in pet food whereas its US peer does not.
The EC said in a regulatory filing dated 27 May it had invited third parties to comment on the transaction, namely the “proposed concentration”, within ten days of that notice.
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By GlobalDataSources for Reuters suggested yesterday the EC is concerned about Mars’ ‘high market share in certain products’ in some EU countries.
Just Food has reached out to the EC for an update on proceedings and to clarify the content of the document issued today. No response had been received at the time of writing.
This publication has also approached Mars and Kellanova for comment.
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 created 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.
After the transaction, Kellanova would become part of Mars Snacking, led by global president Andrew Clarke and headquartered in Chicago, the companies said when the deal was sealed last year.
Kellanova’s manufacturing plant in Battle Creek, Michigan, would also be retained by Mars, the owner of the Kind snacks and M&Ms brands.
Plant-based foods, or Kellanova’s MorningStar Farms brand, would also come under the Mars’ umbrella.
