ABF-GBI competition review extended

By staff reporter

- Last updated on GMT

Related tags European union Associated british foods

The European Commission has extended its competition review of the
planned acquisition by Associated British Foods (ABF) of some parts
of GB Ingredients' business by one month.

ABF announced its intention to buy parts of GB in October 2007.

It was able to complete the acquisition of a wet and dry yeast plant in Italy and a 50 per cent share of Uniferm, a German joint venture, relatively quickly.

Plans to buy sales and distribution businesses in Portugal, Spain and France have stalled due to concern as it would take the number of suppliers compressed bakers' yeast in those markets from three to two.

According to the Commission, the decision has been taken to extend the deadline for the competition review from August 28 to September 25 by agreement between the EU executive and the companies' involved.

While no indication has been given for the reasons for this agreement, today's news is not understood as a hint towards any possible resolution on the table.

The transaction was first notified to National Competition Authorities as it did not meet the thresholds to be considered as a merger of a European dimension under the EU's merger regulation.

It was referred to the Commission after requests from the competition authorities in Spain, Portugal and France, under Article 22 of the Merger Regulation.

After an initial investigation, the Commission subsequently announced an in-depth investigation last month, in a statement in which competition commissioner Neelie Kroes said: "The Commission must make sure that the planned transaction would not adversely affect the quality or price of yeast products which are essential for bakeries of all types and sizes and, so directly affect the daily bread of European consumers."

The Commission stressed that the decision to open an in-depth inquiry "does not prejudge the final result of the investigation."

In the full year ended September 25 2008 ABF Ingredients reported revenue of £728m and profit of £75m. Within this division the yeast business, AB Mauri, has been expanding since it was acquired from Burns Philp in 2004.

"We've been investing in it considerably.

It's a growing part of our business," said ABF spokesman Geoff Lancaster.

AB Mauri now has five production plants in the EU (UK, Ireland, Germany, Spain and Portugal) as well as other parts of the world, and it also distributes yeast from its other plants.

The company indicated recently that South America and China will be important expansion areas for the yeast business over 2008.

Last year it saw strong sales in south and west Asia too.

In addition to supplying ingredients for bakery and yeast applications, the ingredients division is also active in other, value-added ingredients including cereal specialities, emulsifiers, enzymes, lactose, flours, and whey/milk protein concentrates.

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