Antitrust Law Daily U.S. requires divestiture in $900M acquisition of chicken-based food manufacturers
Thursday, October 31, 2019

U.S. requires divestiture in $900M acquisition of chicken-based food manufacturers

By Stephanie K. Mann, J.D.

According to the Antitrust Division, without divestiture of a Georgia facility, the merged companies will create a monopoly with over 75 percent of the market.

Food manufacturer Symrise AG will be required to divest its chicken-based food ingredient manufacturing facility in Banks, Georgia, in order for its proposed $900 million acquisition of International Dehydrated Foods LLC (IDF) and American Dehydrated Food LLC (ADF) from IDF Holdco Inc. and ADF Holdco Inc. to proceed, announced the Department of Justice Antitrust Division. In a complaint filed in the federal district court in Washington, D.C. yesterday, the Department contends that without the divestiture, the combined company would control over 75 percent of the domestic market for the manufacture and sale of chicken-based food ingredients, which would allow the company to increase prices, reduce service and quality, and diminish innovation in the market. The Justice Department also filed a proposed settlement, that if approved by the court, would resolve the government’s competition concerns (U.S. v. Symrise AG, Case No. 1:19-cv-03263).

According to the complaint, Symrise and IDFADF are the leading producers of chicken-based food ingredients, which are sold to food manufacturers for use in a variety of human and pet food products, including chicken soup, chicken broth, and pet food. As detailed in the complaint, the Department believes that a "hypothetical monopolist of chicken-based food ingredients manufactured and sold in the United States likely would impose at least a small but significant price increase because few if any customers would substitute to purchasing other products."

The divestiture would require Symrise to sell its brand-new facility in Georgia to Kerry, Inc. or an alternate acquirer approved by the United States within 45 days after court approval of the proposed judgment. According to the Department, this would ensure that the buyer of the Banks County facility would be well positioned to compete with the merged company in the chicken-based food ingredients in the United States. Under the proposed final judgment, if the facility has not been divested within 45 days, a Divestiture Trustee will be appointed who will oversee the divestiture.

Symrise has said that the divestiture will not impact the strategic rationale for the acquisition. Closing is expected in the coming weeks.

Companies: American Dehydrated Food LLC; International Dehydrated Foods LLC; Kerry, Inc.; Symrise AG

MainStory: TopStory Antitrust AntitrustDivisionNews GeorgiaNews

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