Deans Foods re-launched as Noble Foods and began the divestment of Stonegate last month, after the Competition Commission (CC) ruled against the merger of the two companies on the grounds that it would reduce competition in the UK shell egg sector.
Chief executive Michael Kent aims to complete the changeover to the Noble Foods identity over the next few months. He said: “The CC’s recent decision was a disappointment but our strategic plan was always to launch Noble Foods as our new corporate identity so we can combine the various operating divisions of the original Deans Foods business under one banner to enhance our continuing drive to innovate and lead in all aspects of the egg industry.”
The final CC report, published on 20 April, stated that the two companies had up to six months to complete the initial divesture period. If a buyer for Stonegate is not found within this period, the CC will appoint an independent divesture trustee to sell Stonegate to “a suitable purchaser at the best-available price in the circumstances”.
Then if the independent divesture trustee is still unsuccessful in finding a buyer within six months, the CC will implement an alternative behavioural remedy.
This remedy will allow producers to give six weeks notice to terminate their contract with Noble Foods and switch to an alternative packer. Also the CC would impose a pricing restraint and there would be no time limit set on this final phase.
“It would apply to all of Noble’s third-party producers – both existing and new. This is to ensure that Noble cannot place Deans’ producers on worse terms than Stonegate’s producers, or apply price increases to its retail customers knowing the volume that could transfer would be less than a critical loss volume,” stated the CC report.
Despite industry-wide scepticism that a buyer will be found, the CC remains confident: “A number of parties have suggested that the divestiture of Stonegate would not be viable and the resulting turmoil in the industry would cause damage to producers. However we believe that, the sale of a viable entity is likely.”
But if a UK sale is unsuccessful, Maria Ball, NFU chief poultry adviser, told Poultry World that she believed an international buyer would be a threat to the UK industry.
The NFU has put forward questions to the CC to clarify the terms of the whole divestment process. “We need transparency and clarity,” said Miss Ball.