12th Jun 2015 16:37
LONDON (Alliance News) - The UK Competition and Markets Authority Friday said it will refer Muller UK & Ireland Group LLP's proposed acquisition of Dairy Crest Group PLC's dairies business for an "in-depth investigation" unless acceptable undertakings are offered by the firms.
The proposed GBP80 million cash deal offered by Muller for Dairy Crest's dairies business was referred to the CMA in March, and on Friday, the CMA said: "The proposed acquisition gives rise to a realistic prospect of a substantial lessening of competition in the supply of fresh milk to major grocery retailers with national scope in certain regions in Great Britain."
"The CMA has found that Dairy Crest and Müller would be the 2 main suppliers of fresh milk to national multiples in some regions. The CMA considers that the merger may lead to higher prices in the supply of fresh milk to national multiples and, in turn, for consumers. The constraint provided by other dairy processors may not be sufficient to mitigate the competition concerns arising from the merger," the Authority added.
Dairy Crest released a statement Friday, which said the company was anticipating being referred by the CMA, but reiterated it believes the proposed deal remains in good stead and said it will "help create a more sustainable UK dairy sector."
"Unless the businesses offer undertakings that resolve the competition concerns, this transaction will face an in-depth investigation to ensure that the merger of 2 of the largest UK dairy companies will not result in higher prices for national grocery retailers and, ultimately, for consumers, for whom milk is an important everyday purchase," said Sheldon Mills, CMA senior director of mergers and acquisitions.
Dairy Crest shares closed down 2% to 529.50 pence per share on Friday.
By Joshua Warner; [email protected]; @JoshAlliance
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