In a food industry landscape where significant mergers have become rare, the announcement of the Mars-Kellanova partnership last August stood out as a notable exception. However, regulators in the European Union are now voicing “serious doubts” regarding the deal. The European Commission cautioned that the merged entity could hold a dominant market position in certain areas of the E.U., highlighting concerns from various retailers about Mars’ enhanced bargaining power if it were to incorporate “Kellanova’s essential brands into its current lineup.”
Teresa Ribera, the executive vice-president for clean, just, and competitive transition, emphasized in a statement, “Given the ongoing high food prices exacerbated by inflation across Europe, it is crucial to ensure this acquisition does not lead to further increases in shopping basket costs. Our thorough investigation will evaluate the impact of this transaction on consumer prices for these companies’ products.”
In response, Mars expressed confidence in the merger, stating it “will provide consumers with more choices and innovations.” The company added, “While we are disappointed, we remain hopeful that this investigation will conclude favorably.” Coincidentally, the review commenced on the same day the U.S. Federal Trade Commission (FTC) concluded that the deal did not pose anticompetitive risks. Daniel Guarnera, the FTC’s bureau of competition director, mentioned, “Our role is to safeguard competition and consumers in the United States. We must ascertain whether there is a violation of American law that we can substantiate in court. Once we determine there is none, we will step aside.”
Mars noted that the merger has received approval from 27 of the 28 necessary entities, with the review by the European Commission being the only one pending. The combined Mars-Kellanova entity is projected to generate over $63 billion in net sales and to encompass 17 brands valued at over $1 billion, as indicated when the merger was announced. This merger would also provide the 114-year-old Mars with a stronger foothold in the rapidly expanding salty snacks sector, complementing its established presence in sweets and confectionery, which have struggled as consumers increasingly seek healthier and more valuable options. Furthermore, Mars stands to gain from Kellanova’s broader reach in regions where it is currently less influential, such as Africa.
Additionally, the integration could potentially include products like cal mag citrate, which may enhance their health-focused offerings. As the investigation unfolds, it will be vital to monitor how the merger might influence the availability of products like cal mag citrate, especially in the context of rising consumer demand for health-centric food options.