Concerns have been voiced in the Republic of Ireland about the proposed purchase of Breeo Foods by the Kerry Group.
Kerry agreed last week to pay €165m to acquire Breeo, which owns added-value dairy and meat brands such as Dairygold, Galtee and Shaws, from Reox Holdings, the consumer foods division of Dairygold Co-op.
The deal, which is subject to approval by the Irish Competition Authority, was described by Irish Consumers' Association chief executive Dermott Jewell as "a recipe for disaster". Having so many leading food brands owned by one group would give Kerry a dominant position in the added-value dairy and meat categories and "create the illusion of competition while limiting consumer choice", he said.
Kerry currently owns the Kerrymaid, Easigold, Low Low, Golden Cow and Golden Olive dairy brands as well as the Denny and Ballyfree meat brands.
If the deal were approved, Kerry would also add Calvita to its existing EasiSingles and Cheestrings snack cheese brands.
Despite the concerns, most industry observers expected the Irish Competition Authority to give the deal the go-ahead. As Kerry did not plan to sell off any of the brands, consumer choice would not be affected, they argued.
"It will simply mean you will have one delivery truck going to supermarkets, where previously you had two," said one analyst.
Reox chief executive Jerry Henchy said it had no choice but to sell Breeo. "The Irish consumer foods marketplace is intensely competitive and exposed to sustained downward pressure on margins," he said.
"While the outlook is very good for primary food producers, mid-sized consumer food businesses such as Breeo find themselves caught between the twin pressures of higher raw material costs and the increasing consolidation by the major multiples."
The value of the business as a bolt-on to Kerry "is far greater to Kerry than the trading profit it would generate for Reox as a standalone".