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Mars’ proposed acquisition of U.S. snack producer Kellanova may pass global antitrust regulators, legal experts believe, even if it hits on a sensitive government control issue: food prices.
On Sunday, Reuters claimed that privately held Mars was interested in buying $31 billion Kellanova, which includes debt. Other food mergers, such as Kroger’s $25 billion proposed takeover of Albertsons, face regulatory litigation over their impact on prices after inflation.
Because fresh food is more expensive, lower-income families have relied on packaged food, which raises these problems. In the previous two years, the industry has raised prices due to the COVID-19 pandemic and Russia’s invasion of Ukraine.
According to interviews and notes from six antitrust lawyers and industry analysts, U.S. regulators may struggle to convince antitrust judges that merging Mars, maker of Snickers, M&M’s, Pop-Tarts, and Rice Krispies Treats, with Kellanova, maker of Pringles, Cheez-It, Pop-Tarts, and Eggo frozen waffles, would raise prices or harm competition.
This is because their products overlap a little.
Mars’ portfolio includes Twix, Bounty, and Milky Way, as well as chocolate and candy. The corporation operates veterinarian health centers and makes the most pet food.
Last October, Kellanova separated from WK Kellogg Co. and began selling cereal outside North America and salty snacks in the U.S. and abroad. WK Kellogg retained Kellogg’s North American cereal business.
The numerator reports that 49% of Kellanova’s sales come from salty snacks. Mars’ snacking division—chocolate, candies, gum, and bars—makes up 38% of its annual sales, according to a source.
NielsenIQ estimates Mars and Kellanova would control 12% of the U.S. snacking and candy market. The market would still be competitive with PepsiCo, Kraft Heinz, Mondelez and Hershey. General Mills and other significant businesses compete for consumer money.
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