One of Europe’s largest competition regulators has started an investigation into Ali Group’s proposed acquisition of Welbilt.
The UK’s Competition and Markets Authority (CMA) has confirmed that it has opened a case and will seek comments from interested parties in the deal.
The merger, which is worth $4.8 billion in enterprise value, will unite two of the world’s largest foodservice equipment businesses.
The CMA will explore whether the deal could result in a “substantial lessening” of competition in the UK market, which carries with it the threat of customers paying higher prices.
It stated: “The Competition and Markets Authority (CMA) is considering whether it is or may be the case that this transaction, if carried into effect, will result in the creation of a relevant merger situation under the merger provisions of the Enterprise Act 2002 and, if so, whether the creation of that situation may be expected to result in a substantial lessening of competition within any market or markets in the United Kingdom for goods or services.”
Ali Group and Welbilt have previously indicated that they expect to complete the deal by “early 2022” but the CMA has not yet set out a timeline for concluding its investigation.
It officially opened a case on the matter yesterday and said interested parties have two weeks – until Thursday 24 March – to submit their comments on the transaction.
The invitation gives competitors and customers the opportunity to express any concerns that they have about the deal and the impact it could have on the market.
Welbilt has already had to offload its ice machine brand, Manitowoc Ice, as a result of competition concerns raised in the US.
That business, which made sales of more than $308m last year, is being acquired by water treatment specialist Pentair in a deal worth $1.6 billion.
Ali Group already owns several ice machine brands, including Scotsman and Ice-O-Matic, which led to concerns that the business would have too much control of the market.
The CMA’s investigations are unlikely to jeopardise Ali Group’s takeover of Welbilt, but it could demand that parts of the business are divested if it felt that competition laws would be breached.
Ali Group regards the Welbilt takeover – the biggest it has ever undertaken – as a chance to create a comprehensive product portfolio and enhance its global footprint.
Filippo Berti, chairman and CEO of Ali Group, said last year: “The transaction marks a significant milestone in Ali Group’s history and will position us to better serve our customers and capitalise on attractive growth opportunities. We are excited to welcome Welbilt and its employees to the Ali Group family as we strengthen our global presence and continue to build on our culture of quality and innovation.”