Danisco-Nordzucker sugar deal delayed a month

By Jess Halliday

- Last updated on GMT

Related tags: Mergers and acquisitions, European union

The sale of Danisco Sugar to Nordzucker now looks unlikely to close this month as planned, as more time is required for the competition authorities to address important questions.

The German sugar firm came to an agreement to buy Danisco Sugar in July 2008 for an enterprise value of DKK 5.6 bn, with the addition of around DKK 600 m from sale of EU sugar quota. This amounts to a total of around €750m.

In November the German competition authorities initiated the second stage of the review. The initial deadline for this was given as 26th January.

However Heiner Reiners, a spokesperson for Nordzucker, told FoodNavigator.com: “During conversations with the Bundeskartellamt we learned that there are some questions left that simply need more time to be adequately answered.”

As a result, Nordzucker has asked for more time, until 20th February, to provide more answers. According to Reiners, the company’s view is that there is no need to reach a decision under pressure to close the transaction as soon as possible.

While he was unable to give details on what aspects of the deal are under discussion, it is possible that fulfilment will have some preconditions attached.

However the sheer size of the deal, and the fact that it is “the largest in the industry for many years, and the first of this size under the new sugar regime”​ means the buyer was prepared for considerable scrutiny.

Reiner said that the final decision could also be relevant for deals in the future. “It is logical that [Bundeskartellamt] is interested in a thorough investigation.”

As for Danisco, it has issued a statement saying that it still expects the sale to be completed at the beginning of 2009, and has no further comments at this juncture.

Competition rules

Competition rules regarding mergers and acquisitions in the EU-27 bloc dictate that deals concerning companies generating between €500 million and €5 billion in revenue worldwide, and €25 million in the national country, will be dealt with by competition authorities in the pertinent national country.

When the firms exceed €5billion worldwide in revenue, and €250 million within the EU, it is the competition body in Brussels that takes the mantle for investigating, and giving clearance, or not, on the deal.

One exception to this rule is when two-thirds of the revenue is generated by the firms in one country. When this is the case, the national competition authority can investigate the deal and permit, or deny, the go-ahead.

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