Green light for Cargill-Cerestar purchase

The US Department of Justice this week gave the green light for US agribusiness Cargill to acquire Italian group Montedison's 56 per cent shareholding in Cerestar. The US approval follows approval earlier this year from the European Commission.

Cerestar, recently de-merged from Eridania Beghin-Say, the agribusiness subsidiary of Montedison of Italy, is a leading producer of starch and starch derivatives.

But Cargill has yet to achieve total approval because the United Kingdom is currently investigating the impact the acquisition might have on the supply of glucose syrups and blends in the UK. However, according to Cerestar, the purchase of Montedison's shareholding is not conditional upon the decision of the UK competition authorities, which is expected next month.

Cargill purchased Cerestar for €474 million and there are already industry rumours that it is keen to buy the remaining 44 per cent stake.

Cerestar is the number five starch producer in the world and this year reported a notable improvement in financial results from the preceding year, reducing its net loss from €98.7million to €7.1million. Turnover increased 9.2 per cent to €1.8billion.In 2001 Cargill reported a turnover of €49.4billion.

In Europe, the Cargill acquisition will certainly put the pressure on competing, and considerably smaller, starch companies. Leading competitors include French companies Roquette and Avebe, UK business Amylum Group - part of Tate & Lyle - and Italian company Agrana. They have no choice but to be ready for the challenge.