Mars' $36 Billion Snack Bonanza Faces a Bitter Antitrust Bite

The $36 billion acquisition of Kellanova by Mars Incorporated, announced in August 2024, promised to reshape the global snacking industry. Combining Mars' iconic brands like M&M's and SNICKERS with Kellanova's Pringles, Cheez-It, and Pop-Tarts, the deal aimed to create a $60 billion colossus dominating everything from candy to frozen desserts. But as the European Union's competition regulators tighten their grip, the merger's future hinges on whether Mars can prove its worth—or whether it will be forced to slim down its ambitions.

The Regulatory Gauntlet: EU Scrutiny and the Risk of Divestitures

The European Commission (EC) has emerged as the deal's most formidable obstacle. By June 2025, the EC had concluded its preliminary review, finding Mars' proposed remedies insufficient to address concerns over its dominant position in key EU markets. The EC is particularly worried about overlaps in breakfast cereals, confectionery, and frozen desserts, where the merged entity could stifle competition. With Mars failing to meet a June 18 deadline for revised remedies, an in-depth investigation is now inevitable.

If the EC proceeds, Mars could face a bitter pill: divesting high-profile brands like Kellogg's (outside the U.S.) or Eggo to secure approval. Such a move would undermine the strategic rationale of the deal, which hinges on combining complementary portfolios. Investors should monitor whether Mars is forced to sell assets in concentrated markets like France or Germany, where its market share already exceeds 40% in some categories.

Investors have already priced in regulatory risks: Kellanova's stock has underperformed since the EC's concerns emerged, while Mars has seen volatility tied to regulatory updates.

The Long-Term Viability Challenge: Health Trends vs. HFSS Brands

Even if the deal clears regulatory hurdles, Mars faces a broader reckoning: the global shift toward healthier eating. Kellanova's portfolio—high in fat, salt, and sugar (HFSS)—is increasingly at odds with consumer demand for plant-based, low-calorie, or ethically produced snacks. MorningStar Farms and RXBAR, two Kellanova brands, offer some mitigation, but the bulk of the acquired business leans heavily on legacy snacks.

Analysts are split on whether Mars can pivot these brands toward wellness without diluting their appeal. MorningStar Farms' plant-based products have seen growth, but Pop-Tarts and Cheez-It remain staples of “junk food” categories facing regulatory headwinds. In the EU, lawmakers are already targeting HFSS marketing and sales, with some countries proposing taxes on sugary snacks. For Mars, the question isn't just whether the deal closes—but whether it can justify the $36 billion price tag in a shrinking HFSS market.

Risks vs. Rewards: A Delicate Balance for Investors

The merger's risks are clear: a prolonged EC investigation could delay the close beyond 2025, incurring termination fees or stranded costs. If forced to divest core brands, Mars' projected synergies—$800 million annually—could evaporate. Meanwhile, Kellanova shareholders might demand higher compensation, raising the deal's total cost.

Yet the rewards are equally compelling. A merged entity could dominate supply chains, cut costs through scale, and better compete with rivals like PepsiCo and Mondelez. The combined R&D might also accelerate innovation in healthier snacks, turning a potential liability into an asset.

The “better-for-you” segment is growing at twice the rate of traditional snacks, signaling a strategic imperative for Mars to pivot its portfolio.

Investment Takeaways: Proceed with Caution

For investors in consumer goods M&A, Mars' deal is a cautionary tale. The EU's focus on market dominance and HFSS products underscores a broader regulatory trend: conglomerates can't just buy growth anymore—they must prove they're building sustainable, socially responsible businesses.

• Hold for Now: Wait until the EC's final decision emerges (expected by late 2025). A clean pass could unlock 15–20% upside for Mars' stock.
• Beware the Divestiture Discount: If Mars must sell key brands, revalue the company based on remaining assets.
• Monitor Health Trends: If Kellanova's HFSS brands underperform, the merger's long-term value could crater—even if regulators greenlight it.

In the end, Mars' $36 billion gamble isn't just about snacks—it's about whether a legacy of sugary treats can survive in a world demanding sweeter ethics. The answer will shape the fate of one of the most consequential M&A deals in decades.

Final Call: Hold Mars shares until regulatory clarity emerges. Avoid Kellanova until the EC's verdict is certain. For M&A investors, this deal underscores the need to prioritize companies navigating regulatory and health trends proactively.