E.U. to take closer look at Cargill-ADM chocolate deal

by Jeff Gelski
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BRUSSELS — The European Commission on Feb. 23 said it had opened a Phase II, or more in-depth, investigation of Cargill’s proposed acquisition of the industrial chocolate business of Archer Daniels Midland Co. The commission, the executive body of the European Union, said its Phase I, or preliminary, investigation showed potential competition concerns in the supply of industrial chocolate to customers in Germany and the United Kingdom.

Customers of industrial chocolate include producers of biscuits, ice cream, chocolate confectionery and other end-user products. The commission said it found Cargill, ADM and Barry Callebaut are the main suppliers of industrial chocolate to customers in Germany and the United Kingdom. Several smaller competitors that supply industrial chocolate have a more limited presence and do not pose a sufficient competitive constraint on the parties, according to the commission.

“The proposed transaction could eliminate an important competitor and reduce the choice of suitable suppliers in already concentrated markets, which could lead to price increases,” the commission said.

The commission has until July 8 to investigate the proposed acquisition in-depth.

“We acknowledge the announcement from the European Commission to extend the review process for the purchase of ADM’s chocolate business,” said Louis de Schorlemer, EMEA (Europe, Middle East and Africa) corporate communications manager, corporate affairs, for Cargill, on Feb. 24. “We respect the regulatory process and will continue to work with the regulators over the coming weeks to address their questions. The commission needs to complete its process, but we still expect completion of the deal in mid-2015.”

Jackie Anderson, a spokesperson for Chicago-based ADM, said on Feb. 24, “The E.U. Commission has announced an extension of the review process for the sale of our chocolate business to Cargill, as they continue to work with both companies and gather information. We are now targeting closing in mid-2015. We respect the regulatory process and will continue to work with regulators so as to complete this deal as quickly and efficiently as possible.”

Minneapolis-based Cargill on Sept. 2, 2014, initially announced its plan to purchase ADM’s global chocolate business for $440 million. The transaction includes three ADM European chocolate plants in Liverpool, United Kingdom; Manage, Belgium; and Mannheim, Germany, as well as three ADM North American chocolate plants in Milwaukee; Hazleton, Pa.; and Georgetown, Ont.

The transaction does not include ADM’s activities in semi-finished chocolate products such as cocoa liquor, cocoa butter and cocoa powder. ADM on Dec. 15, 2014, said it had agreed to sell its global cocoa business to Olam International Ltd. for $1.3 billion, subject to customary adjustments.
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