10th Aug 2015 14:52
LONDON (Alliance News) - The UK Competition and Markets Authority Monday said it has opened up its investigation into the proposed deal between Muller UK & Ireland Group LLP and Dairy Crest Group PLC to third parties and said it has extended the deadline until October when it will make a final decision.
The anti-trust regulator said it has accepted undertakings from Muller in order to satisfy its competition concerns, and said it plans to accept these unless any opposition appears during the consultation period, which is now open to third parties.
Back in June, Muller offered concessions to the CMA regarding its acquisition of FTSE 250-listed Dairy Crest's dairies business after the two companies reached a deal in November whereby Muller would pay GBP80 million to Dairy Crest for the businesses, leaving Dairy Crest focused on spreads and cheeses.
In response, the CMA said Muller was required to sell to another dairy processor an option to require Muller to process a certain volume of fresh milk each year for supply to national grocery retailers as part of those undertakings.
On Monday, the CMA said Muller is in talks with two dairy processors to seal the necessary toll processing agreement to satisfy those undertakings. Those two companies are Medina Holdways Ltd and Nijjar Group Holdings (Action) Ltd.
"The CMA proposes to accept the proposed undertaking, which it currently considers is appropriate to remedy its competition concerns," it said on Monday.
Dairy Crest released its own statement Monday. "We have always believed the sale of our dairies operations is good news for the whole UK dairy sector which is currently facing significant challenges arising from low dairy commodity returns," Chief Executive Mark Allen said. "It will deliver economies of scale and cost efficiencies that will underpin investment and help the UK compete more successfully in global markets."
However, before a final decision is made, the CMA has invited third parties to comment on both the suitability of those two potential purchasers as effective competitors to Muller in the supply of fresh milk to national multiples and on whether the proposed undertakings are appropriate to remedy in a clear-cut manner the competition concerns identified by the CMA.
Third-parties wishing to comment have until August 25 to submit opinions.
The anti-trust regulator also said it has extended the deadline by which it will make the final decision on the proposed deal and undertakings to October 19 from its previous date of September 9, but said it may make a final decision before this date.
"Today's announcement that the CMA proposes to accept Müller's undertakings is a positive step forward and the extended timetable still allows us to complete the sale in 2015," said Dairy Crest's Allen.
Dairy Crest shares were down 0.9% to 599.0 pence per share on Monday afternoon.
By Joshua Warner; [email protected]; @JoshAlliance
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