Divestitures galore if Case deal proceeds

5 November 1999

Divestitures galore if Case deal proceeds

By Andy Collings

IF the proposed purchase of Case by New Holland is to proceed, the Case Doncaster plant will need to be sold along with its CX and MXc product lines, as will the Case Fermec manufacturing plant at Manchester with its backhoe loader and industrial tractor product lines.

These are just two of a series of divestitures insisted on by the European Commission for it to give approval to the £2.6bn deal.

Other requirements are for the sale of the New Holland Laverda combine harvester product line (not hillside models) and the Breganze-based Italian factory in which they are built. The sale of Case large square balers built at Neustadt is also one of the requirements.

Steyrs future looks to be safe with agreements to license or build the M-948 and M-958 tractors – and equivalent Case-badged models – for sale by a third party. In the UK, Steyr is marketed by Bonhill Marketing.

For the deal to proceed, it must now receive approval from the US Department of Justice. Discussions are proceeding.

The conditions imposed by the European Commission are based on concerns for fair competition. Without the proposed sales the commission concluded there would have been a risk of dominant positions being strengthened in particular markets to the point that retail prices could be influenced and competition from rival manufacturers unfairly challenged.

The Commission believes the divestitures will result in reduced market shares for the proposed New Holland/Case entity. It also points out that as the purchasers of the divested businesses will also have access to New Holland or Cases distribution networks, they will be viable competitors.

The question, of course, is who will buy the divested businesses?

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