Breeo Foods sale blocked

REOX may be forced back into the marketplace to seek a repeat deal offering the “compelling value” which had swung its decision to sell its Breeo division to Kerry Group.

The plans of the Dairygold Co-Op subsidiary, and of Kerry Group, have been thrown into disarray by the Competition Authority prohibition of the deal.

As a result, the sale may not be put into effect.

Following a full investigation by the Authority’s mergers division, it was only the third time the Authority has blocked a proposed merger since Competition Act merger control provisions came into effect in January 2003.

None of the previous blocked mergers has been appealed, and if Kerry Group and/or Reox appeal, they will be depending on the High Court to second-guess the Competition Authority’s fact-finding. The Authority shot down the proposed €165 million acquisition by Kerry Group plc (through Rye Investments Limited) of the entire ordinary issued capital of Breeo Foods Limited and Breeo Brands Limited, on the grounds that such a transaction would substantially lessen competition in the markets for the production, supply and distribution of rashers, non-poultry cooked meats and processed cheese.

The authority is required by the Competition Act 2002 to publish details of their determination within one month. No further comment will issue from the Authority in the meantime.

Meanwhile, business will continue as usual at Breeo, whose brands include Galtee, Dairygold, Shaws, Calvita and Mitchelstown.

Breeo’s owner, Reox, was formed in 2006 by the spin-out of consumer foods, DIY retail, and property divisions of Dairygold Co-Operative Society Limited.

Reox chief executive Jerry Henchy had said the Breeo division would not be sold unless the deal delivered “compelling value” for its shareholders.

* Stockbrokers Goodbody said the blocking by the Competition Authority of the Breeo Foods acquisition will not affect Kerry Group earnings. Meanwhile, the two parties have 60 days to appeal the decision to the High Court.

The brokers said the acquisition would fit very well with Kerry Group’s Irish food operations, but that it should also have other acquisition opportunities, particularly in Britain, at competitive prices within the next 12 to 18 months.