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European regulators are poised to launch an antitrust investigation into Mars’s $35.9bn acquisition of Pringles and Pop-Tarts maker Kellanova, according to people briefed on the decision.
The privately held food and petcare company’s agreement to buy its US peer was one of last year’s biggest M&A deals. The companies have previously said they expected the transaction to close by June 30.
Mars, known for sugary snacks such as M & M’s, Snickers and Skittles, had not offered remedies to address European Commission concerns about high market shares identified in a preliminary review of the acquisition, the people said.
Poul Weihrauch, chief executive of Virginia-based Mars, which is one of the world’s largest family-owned businesses, previously has said he does not anticipate major regulatory scrutiny because the Mars and Kellanova businesses were complementary.
Kellanova, which also makes Cheez-It crackers, Rice Krispies Treats and Eggo waffles, was formed in 2023 after the Kellogg company separated its breakfast cereals and snacks businesses. Mars agreed to purchase the company last August for $83.50 a share after months of negotiations.
Kellanova stock closed at $78.94 a share on Wednesday after the prospect of an EU investigation was first reported by Reuters. The US stock market is closed on Thursday for a public holiday.
The commission declined to comment. Mars and Kellanova did not immediately respond to requests for comment.
The deal is one of the biggest in a packaged food sector that has suffered sustained decline in volumes as stretched consumers retrench in the face of higher prices. Meanwhile, “Big Food” is facing a new threat from the rise of novel drugs used for weight loss such as Ozempic and Wegovy.
Chicago-based Kellanova, with annual revenue of $12.7bn, reported selling 2.5 per cent less food by weight in the first quarter, led by declines in North America, Europe and Latin America.
Steve Cahillane, Kellanova chief executive, pointed in a May earnings release to “what is undeniably an uncertain macroeconomic and industry environment”.
According to their merger agreement, either Mars or Kellanova may walk away from the deal if it is not consummated by August 13, but the deadline is subject to two extensions of six months each if the delay is the result of regulatory reviews.
Additional reporting by Madeleine Speed in London and Gregory Meyer in New York
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