Stork, Marel merger gets EU green light

The European Commission (EC) has given the go ahead to the acquisition of Stork Food Systems (SFS) by Marel after an investigation by the European competition authorities.

Both Dutch company SFS and Iceland's Marel are manufacturers of meat and fish processing machinery, while Stork also produces juice, dairy and potato processing machinery.

The EC said that while the two companies have complementary activities, its investigation had revealed no real competition issues.

Some of the companies' competitors had raised concerns about the potential impact on the poultry processing market, where both companies operate, and the EC investigated whether 'bundling' SFS' slaughtering, cutting and deboning products with Marel's weighing and grading machinery would lead to distortions in that particular sector of the market.

According to the EC, "the market investigation did not confirm a trend towards fully integrated processing lines at this stage. Moreover, the investigation indicated that competitors of Marel could offer alternative equipment."

Another investigation, into the potential risk of Marel's process control software being obligatorily bundled with processing machinery, discovered that Marel's position in that market was only "limited" and that the software concerned was based on 'open' products widely available to other companies.

Again, the Commission found that a number of alternative suppliers were well established on the market.

"The Commission therefore came to the conclusion that the merged entity would have neither the ability nor the incentive to block its competitors by way of technical tying," the EC said in a statement.

Stork announced in November 2007 that it would sell its food processing operations to Marel in a €415m deal that will more than double Marel's turnover.

Hordur Arnarson, Marel's chief executive, told FoodProductionDaily.com in January that the merger would allow the two firms to benefit from economies of scale and optimise their R&D expenditure.

"We already invest €40m every year in R&D. We'll be able to utilise our R&D spend better in the future," he said.

Speaking after the EC approval was given on 21 April, Arnarson added that "the two companies will be a forerunner in the development of equipment for the food processing industry. Their combined turnover is €660m and the number of employees exceeds four thousand."

"Marel Food Systems will now have the critical mass to enter emerging markets and is better placed to provide comprehensive services to large international clients."

Marel and Stork have worked together already on numerous projects over the last 10 years, and Arnarson said that finally combining the two companies would help them better meet the challenge of new business opportunities in emerging markets.

"We are seeing competition from China in some areas and we expect that to increase in the future," said Arnarson in January.