Although the takeover would give Givaudan a leading position in the European markets for flavours and fragrances, the Commission concluded that Quest and Givaudan are not the closest competitors in these markets. The combined firm would continue to face competitive pressure from several established multinational players with significant market shares as well as many smaller competitors to which customers could switch in the event of price increases.
Furthermore, in the market for aroma chemicals, the merged entity would not become the leading player and the presence of several strong, effective competitors with significant market shares would guard against the risk of any anti-competitive effects from the merger. The Swiss firm's capture of ICI's flavouring and fragrance business has therefore been approved under the EU merger regulation.
The £1.2bn acquisition underlines Givaudan's ambitions in the global flavour industry. "Quest has regained momentum over the last three years thanks to the talent and commitment of its people," said Givaudan chief executive Gilles Andrier in November.
"Thus, we are very excited to have this unique opportunity of creating an unrivalled industry leader, building on the strength, momentum and common values of both companies." Indeed, the acquisition is in line with Givaudan's strategy of focusing on developing markets and capturing opportunities in key segments. The company has worked hard to streamline its operations, and in 2005 successfully completed the transfer of the liquid and dry flavour production from Barneveld (Netherlands) to Dortmund (Germany) and Zurich (Switzerland).
In addition, the final phase of the Savoury Development Centre in Kemptthal (Switzerland) was recently completed with the inauguration of a fully dedicated pilot plant, capable of handling a wide range of food manufacturing processes. The acquisition is designed to build on this focus, and also strengthen growth in important growth markets such as Asia Pacific, Latin America and Eastern Europe. Givaudan reported double-digit growth last month in developing markets such as China, India, Argentina and Columbia.
And the acquisition should also have positive implications for Givaudan's technology portfolio. The company said that the transaction would enable the company to significantly increase its research and development investments.
In 2005 Quest had sales of £560 million and a trading profit of £52 million. Quest is headquartered in Naarden, The Netherlands, and employs around 3,400 globally with major activities in the US, UK, Asia and Continental Europe.