European Commission clears Barry Callebaut’s acquisition of Petra Foods’ cocoa ingredients unit

Swiss cocoa and chocolate products manufacturer Barry Callebaut’s $950m deal to acquire the Cocoa Ingredients Division of Singapore-based Petra Foods has received approval from the European Commission (EC), bringing the company a step closer to completing the acquisition.

An investigation by the EC showed that there were sufficient alternative suppliers in the markets concerned and that the merged entity would not significantly lower competition in the concerned markets.

The Commission evaluated the competitive effects of the merger in the markets for the procurement of cocoa beans and the production and sale of semi-finished cocoa products such as cocoa liquor, cocoa butter and cocoa powder, where the parties’ activities overlap.

In addition, it examined the vertical relationships between these activities and the market for industrial chocolate, where Barry Callebaut has a strong presence.

The EC found that the merged entity’s position in the global market for the procurement of cocoa beans remains sufficiently moderate.

In addition, as Petra Foods has a strong presence in Asia, the parties’ activities focus on different regions, especially in the markets for the production and sale of semi-finished cocoa products.

The EC, therefore, stated that the impact of the proposed deal is limited within the European Economic Area (EEA) and customers would continue to have a sufficient number of suppliers.

In addition, the merged entity would continue to face competition from competitors – ADM and Cargill – as well as from a number of smaller players.

Barry Callebaut entered into an agreement to acquire the cocoa ingredients business of Petra Foods for $950m in December 2012.

The proposed acquisition will expand Barry Callebaut’s cocoa sourcing and processing capabilities, and strengthen its current and future outsourcing and partnership agreements.

Barry Callebaut is a producer of cocoa products with operations worldwide across the cocoa value chain.

Petra Foods’ Cocoa Ingredients Division is a leading cocoa products supplier in Asia with a sales volume of 265,000t globally.

The division has seven processing facilities in Malaysia, Indonesia, Thailand, Brazil, Mexico, Germany and France, with a total bean grinding capacity of 405,000t, and sales offices in Singapore, the Netherlands and the US.

It has annual sales of CHF1.1bn ($1.17bn) and employs 1,700 people.

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Image: The European Commission found that the merged entity would continue to face competition from a number of other strong competitors. Photo: Courtesy of Barry Callebaut.