US FTC Okays Mars' $36B Kellanova Deal, European Regulator Wants More Time

The U.S. Federal Trade Commission on Wednesday approved Mars' proposed $36 billion takeover of Pringles maker Kellanova (K), saying that the merger does not pose a market risk.

However, on the same day, the European Commission said it was opening an investigation over concerns that the merger would give the companies substantial bargaining power and potentially lead to higher prices.

Privately held Mars agreed to buy Kellanova in an all-cash deal in August last year, as part of a plan to expand its snacks business, which includes M&M's, Twix, and Skittles, with Kellanova's products such as Pop-Tarts and Cheez-Its.

"Our job is to determine whether there is a violation of American law that we can prove in court. And once we've concluded there is not, our job is to get out of the way," Bureau of Competition Director Daniel Guarnera said in an FTC statement announcing the early termination of its review of the deal.

Mars CEO Poul Weihrauch said the company was pleased with the clearance, which "brings us one step closer to uniting two iconic businesses." Kellanova shares were up 1.2% in extended trading.

On the other hand, the EC said it believes that the combination would force retailers to accept higher prices to avoid being unable to sell both its and Kellanova's products. Officials have set an Oct. 31 deadline to decide on their in-depth probe.

According to a statement from Mars, the deal has received all but one of the 28 required regulatory clearances, with only the review by the European Commission outstanding.

The companies expect the transaction to close towards the end of 2025, later than their earlier expectation of the first half of 2025.

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