Hain Celestial has offered to sell its UK own-label freshly squeezed fruit juice business to ease competition fears surrounding the acquisition of Orchard House Foods.
The Competition and Markets Authority (CMA) warned last month that the deal would face an in-depth investigation unless Hain’s UK arm came up with an acceptable solution.
The deals watchdog said it was worried the merger between Hain and Orchard would lead to higher own-label fruit juice prices for supermarkets and shoppers as the companies were the only two own-label suppliers to supermarkets in the £112m market.
Hain, which owns Ella’s Kitchen, New Covent Garden and Tilda, is now seeking a “suitable purchaser” for its freshly squeezed juice business in a bid to get clearance for the Orchard House deal.
The CMA added that this undertaking, or a modified version of it, “might be acceptable”.
“The CMA will now consider whether to accept the proposed undertakings and will open a public consultation on whether they – and any proposed purchaser for the divestment business – are sufficient to address the competition concerns. If the CMA does not accept the undertakings, it will refer the merger for a phase 2 investigation,” the regulator said.
Hain agreed to buy Orchard House from Wellness Foods in December in a move to make its portfolio healthier. Orchard House was one of the two remaining Wellness brands, along with Fruit Bowl, following the sales of Rowse Honey to Valeo Foods and Dorset Cereals to Associated British Foods in 2014. Hain said in December that it expected Orchard to generate between $60m (£40.4m) and $65m (£43.8m) in net sales in 2016.
The US food group plans to use Orchard’s shelf life expanding technology for new products under the Ella’s Kitchen, Hartley’s, Johnson’s Juice Co and Sun-Ripe brands.
The two companies will continue to operate independently until the deal gets the regulatory green light.
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