Antitrust Law Daily Wilhelmsen Maritime Services abandons proposed acquisition of Drew Marine Group
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Monday, July 23, 2018

Wilhelmsen Maritime Services abandons proposed acquisition of Drew Marine Group

By Jody Coultas, J.D.

In light of a preliminary injunction issued by the federal district court in the District of Columbia temporarily blocking Wilhelmsen Maritime Services’ proposed acquisition of competitor Drew Marine Group, Wilhelmsen has announced that it is abandoning the deal. The FTC had alleged that the proposed $400 million acquisition of Drew Marine Group would violate the antitrust laws by significantly reducing competition in an important market for marine water-treatment chemicals and services used by global fleets (FTC v. Wilh. Wilhelmsen Holding ASA, FTC File No. 171 0161, Civil Action No. 1:18-cv-00414); (In the Matter ofWilhelm Wilhelmsen, FTC Docket No. 9380).

Marine water-treatment chemicals prevent corrosion, remove impurities, and enhance the operation of a vessel’s systems. Wilhelmsen, based in Norway, is the world’s largest supplier of water treatment chemicals and services to global fleets. New Jersey-based Drew is the second-largest such supplier. The water-treatment chemicals and services provided by the respective companies are used by "tankers, container ships, bulk carriers, cruise ships, and military support vessels to maintain critical on-board equipment."

The FTC administrative complaint maintained that the two companies are each other’s closest competitors on numerous competitive dimensions that are important to customers—including product scope, quality and consistency, technical service capability, and global distribution footprint. According to the agency, if consummated, the merger would result in Wilhelmsen’s control of "at least 60 percent of the global marine water treatment chemical and service market. The next closest competitor represents an inferior choice for global fleets, and would control less than 5 percent of the market, the FTC said.

In a sealed order, the district court enjoined and restrained Wilhelmsen and Drew under Section 13(b) of the Federal Trade Commission Act, 15 U.S.C. § 53(b), from consummating the proposed acquisition until the completion of an administrative proceeding evaluating the merger pending before the Commission.

"The U.S. District Court’s grant of a preliminary injunction to temporarily block Wilhelmsen’s proposed acquisition of Drew, and Wilhelmsen’s decision to abandon the acquisition deliver a victory for competition and consumers. The evidence shows that the acquisition would have led to higher prices and diminished service in the supply of marine water treatment chemicals to global fleets. These chemicals and services are critical in the operation of these fleets, which are vital to U.S. and global trade, and include tankers, container ships, bulk carriers, cruise ships and U.S. military support vessels," said FTC Bureau of Competition Acting Deputy Director Haidee L. Schwartz.

"We disagree with the views of the US competition authorities. This would have been an important strategic investment for our group, which we believe would have meant better services and better prices for our customer. We are therefore disappointed that we will not be able to bring the deal to a close," said Thomas Wilhelmsen, group CEO in Wilhelmsen.

Attorneys: Corey W. Roush (Akin Gump Strauss Hauer & Feld LLP) for Wilh. Wilhelmsen Holding ASA and Wilhelmsen Maritime Services AS. Mark W. Ryan (Mayer Brown LLP) for Resolute Fund II, L.P., Drew Marine Intermediate II B.V. and Drew Marine Group, Inc.

Companies: Wilh. Wilhelmsen Holding ASA; Wilhelmsen Maritime Services AS; Resolute Fund II, L.P.; Drew Marine Intermediate II B.V.; Drew Marine Group, Inc.

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