Commission Approves Sudzucker’s Proposed Stake in ED&F MAN

The Commission's in-depth investigation focused on the supply of refined sugar to food and beverage industrial processors in Italy where the proposed transaction would have brought ED&F MAN's participation in the Brindisi refinery under the control of the current market leader, Südzucker.

17 May 2012 --- Following an in-depth review, the European Commission has cleared under the EU Merger Regulation the proposed acquisition of control by Südzucker of Germany, Europe's largest sugar producer, over ED&F MAN of the UK, the second largest sugar trader worldwide and a company also active in sugar production. The approval is conditional upon the divestiture of ED&F MAN's interests in the Brindisi refinery, the biggest and most modern production facility in Italy.

“Sugar is an important nutritional element and an essential ingredient for the food and beverages industry. The current high prices and scarcity of sugar across the EU make it all the more important to maintain competition on the already concentrated European sugar markets. The divestment of the Brindisi refinery ensures that the merged entity will face a viable competitor in the Italian market." said Joaquín Almunia, Commission Vice President in charge of competition policy.

The Commission's in-depth investigation focused on the supply of refined sugar to food and beverage industrial processors in Italy where the proposed transaction would have brought ED&F MAN's participation in the Brindisi refinery under the control of the current market leader, Südzucker. The proposed transaction would have eliminated current and potential competition between the parties and created a dominant player with market shares above 50%.

In order to address these competition concerns, the parties offered to fully divest ED&F MAN's shareholding in the Brindisi refinery. Because of the current scarcity and high price of preferential raw cane sugar - i.e. raw cane sugar not subject to import duties or quotas - the parties also committed to transfer to the purchaser the long-term contracts through which Brindisi obtains sufficient raw cane sugar input from providers at competitive prices. These commitments ensure that the Brindisi refinery will remain a viable and competitive force in Italy, independent from the merged entity.

The Commission also found that the proposed transaction raised no competition concerns for the supply of raw cane sugar and molasses in the EU, the supply of refined sugar in Greece and the wholesale supply of refined sugar to retailers in Italy.

The Commission was therefore able to clear the merger on the basis of the commitments proposed.

Suedzuecker will sell ED&F Man’s shareholding in the plant in Brindisi as a condition of EU authorization for the $225 million deal.

Suedzucker, which makes sugar, starch and bakery additives, last year agreed to buy the stake of 25 percent minus one share in London-based ED&F Man to widen access to markets outside Europe.