High Court clears way for Kerry’s €140m Breeo buyout
The price announced yesterday was cut by €25m to €140m to reflect the deterioration in the market since the initial bid was made.
It is well below the debts of Breeo’s parent group, Reox Holdings, which has built up borrowings of €170m since it was set up in May 2006.
Reox made its former chief executive Jerry Henchy redundant this week as the crisis at the group deepened.
This case represents the first time a Competition Authority ruling has been challenged.
In his ruling Mr Justice John Cooke said the authority was guilty of serious errors of judgment.
The authority’s conclusion of a substantial lessening of competition in the market for processed cheese as a result of the merger was fundamentally flawed, he held.
He said it also erredmaterially in finding the merger would mean substantial lessening of competition in the markets for rashers and non-poultry cooked meats.
The unprecedented High Court ruling throws the struggling Reox Group a badly needed lifeline as its food, property and DIY operations struggle to survive in the economic downturn.
Dairygold, from which it was spun out, is also understood to be under severe pressure and its borrowings have nearly doubled to €70m in 2008.
About 7,000 farmers in the North Cork are co-op member or have equity stakes in Reox,
The latter is 75% owned by farmers, while Dairygold owns the other 25% of the business.
The deal is not out of the woods yet, however.
Last night, the Competition Authority warned that it could appeal the decision to the Supreme Court, a spokeswoman said.
“We will review our options over the next few days, when a decision on what action if any will be taken,” she said.
Welcoming the decision of the court, Kerry’s chief executive Stan McCarthy said: “We will now proceed to complete this important acquisition by our consumer foods division.”
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