Lakelands moves closer to takeover of rival co-op LacPatrick

Dairy co-op Lakelands moved closer to a takeover of rival LacPatrick after one of two regulators scrutinising the deal gave an initial indication that it would have no impact on competition.

Shareholders in both co-ops last October backed Lakelands’ proposed purchase of LacPatrick, which will create a dairy processor with yearly sales of more than €1 billion.

The UK's Competition and Markets Authority, which is investigating the transaction as both co-ops have operations in Northern Ireland, has lifted an enforcement order imposed while it began investigating the deal.

The authority’s move is an initial indication that it believes Lakelands’ purchase of Lacpatrick will not affect commercial competition. However, it is not a formal decision, which is due by March 13th.

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Consequently, it is understood that the watchdog could still move to a more detailed phase-two investigation of the deal, which in turn could lead to it blocking or imposing conditions on the parties before allowing the takeover.

Southern investigation

Separately, the Competition and Consumer Protection Commission is continuing with an investigation of the deal's implications for both companies' markets in the Republic.

The commission is also due to decide in mid March whether to allow the transaction or move to a phase-two investigation.

The watchdog sought further information on the deal from the parties after originally receiving notification of it in November. The commission received the extra information at the end of January and confirmed that its phase one investigation was still under way.

National laws in both jurisdictions require regulators to investigate large mergers or takeovers to ensure that they will not substantially damage competition, allowing them to block deals if that is found to be the case.

Financial problems

Lakelands agreed to buy its rival last year after financial problems prompted LacPatrick to seek a tie-in with another processor.

LacPatrick, which has its headquarters in Monaghan, began exclusive talks with Lakeland late last June.

The sides had hoped to complete the deal early this year, but said this depended on getting both regulators’ approval.

Both Lakelands and LacPatrick have suppliers, processing facilities and customers on either side of the Border.

Lakelands was one of four suitors singled out in April when it emerged that LacPatrick was seeking to join forces with another player.

Dale Farm, Glanbia and Aurivo were also in the race, but Lakelands was regarded as favourite.