EC opens investigation into ABF yeast deal

Tag : Dry Yeast
In a statement the Commission said that after an initialinvestigation it had "serious doubts" about the planned merger's "compatibility" with the single EU market because of possible competitionproblems, particularly in the market for compressed bakers' yeast in Portugal, Spain and France.

ABF announced plans to buy several parts of GBI in an internal memo in October 2007. It has already completed theacquisition of a wet and dry yeast plant in Italy and a 50 per centshare of Uniferm, a German joint venture.

But plans to buy sales and distribution businesses in Portugal,Spain and France met with concern. The three countries referred thecase to the Commission as the merger would reduce the number ofeffective suppliers from three to two .

"The Commission must make sure that the planned transaction wouldnot adversely affect the quality or price of yeast products whichare essential for bakeries of all types and sizes and, so directlyaffect the daily bread of European consumers," said competition commissioner Neelie Kroes in the statement.

ABF's yeast business, AB Mauri, has been expanding since it wastaken over by the group from Burns Philp in 2004.

"We've been investing in it considerably. It's a growing part ofour 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.ABF also distributes yeast from its other plants. Yeast is a keyingredient in bread and other bakery products, pizza, dough bases,beer, wine and other foodstuffs.

The company indicated recently that South America and China will beimportant expansion areas for the yeast business over 2008. Lastyear it saw strong sales in south and west Asia too.

Lancaster could not comment on the current investigation.

The decision to open the inquiry does not prejudge the final resultof the investigation, the Commission said. It has until 28 Augustto decide whether the deal would hamper competition if it goesahead.

The transaction was first notified to National CompetitionAuthorities as it did not meet the thresholds to be considered as amerger of a European dimension under the EU's merger regulation. Itwas referred to the Commission after requests from the competitionauthorities in Spain, Portugal and France, under Article 22 of theMerger Regulation.

GB Ingredients is one of the world's top 3 yeast manufacturers,reporting sales of €392 million in 2006. Last year it soldoff its bakery ingredients business to focus on yeast products.