Mars Just Got The Green Light For Its $36B Deal — But Europe Might Blow It Up

On Wednesday, the U.S. Federal Trade Commission (FTC) concluded its antitrust review of Mars Incorporated’s pending acquisition of Kellanova (NYSE:K).

Mars is a family-owned company in the pet care, snacking, and food industries.

In August 2024, Mars agreed to acquire Kellanova for $36 billion, or $83.50 per share.

Poul Weihrauch, CEO & Office of the President, Mars, said: “We are very pleased that the FTC has completed its review of the transaction without the imposition of any condition or requiring any remedy. The transaction has now received all but one of the 28 required regulatory clearances, with only the European Commission’s review outstanding.

Based on the current status of the European Commission’s ongoing antitrust review, Mars and Kellanova expect the transaction to close by the end of 2025.

Also Read: FDA Targets Synthetic Food Dyes In Sweeping Nutrition Overhaul

The exact timing cannot be predicted with any certainty at this point.

On Wednesday, the European Commission opened an in-depth investigation to assess, under the EU Merger Regulation, Mars’ proposed acquisition of Kellanova.

The Commission has preliminary concerns that the transaction could lead to higher prices for consumers due to Mars’ increased negotiating power towards retailers in the European Economic Area.

As a result, Mars could use this increased leverage to, for example, extract higher prices during negotiations, which would, in turn, lead to higher prices for consumers.

The Commission has serious concerns based on these early findings:

• Both companies already have a strong presence in several markets across different EU countries, partly because they sell popular brands that consumers consider essential.
• Retailers in the European Economic Area (EEA) are worried that if Mars adds Kellanova's key brands to its lineup, it would gain even more power in negotiations. This could force retailers to agree to higher prices just to keep these must-have products on their shelves.
• Since many shoppers prefer to do all their grocery shopping in one store, they might switch to another supermarket if their favorite brands from Mars and Kellanova aren't available.

The Commission was notified of the proposed transaction on May 16. It has 90 working days, until Oct. 31, to decide.

Kellanova reported a first-quarter FY25 sales decline of 3.6% year-on-year to $3.08 billion, missing the analyst consensus estimate of $3.18 billion.

While net sales were impacted by negative currency translation and widespread category softness, the company sustained organic growth, led again by its emerging markets.

Adjusted EPS of $0.90 missed the consensus estimate of $1.01.

Price Action: K stock is up 1.04% at $78.65 during the premarket session at the last check on Thursday.

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