ForFarmers UK and 2Agriculture abandon proposed merger plans
The planned tie-up was under investigation by the UK Competition and Markets Authority (CMA), with that watchdog rejecting the remedies put forward by both parties last month to address its concerns that the merger would result in UK farmers paying higher prices to feed their poultry.
The Netherlands headquartered ForFarmers group first announced the proposed JV in July last year. ForFarmers UK and 2Agriculture both manufacture and supply chicken and other types of poultry feed in the UK. Between them, the two entities operate 19 mills in the region. One of the UK’s largest suppliers of poultry feed by volume produced, 2Agriculture uses its production to supply Hook 2 Sisters, a company affiliated with Boparan, as well as farmers on the open market.
Impact on feed prices
The competition authority's Phase 1 review of the proposed tie-up found there could be challenges arising from combining the operations in relation to the supply of competitively priced poultry feed at a local level, within the catchment areas centered on the companies’ Burston, Bury, Llay and Preston mills, and on the downstream supply of chicken in the UK.
While both businesses currently compete for customers within each of these local areas, the regulator was concerned that the combined business would not face sufficient competition after the merger. Additionally, the CMA said it has received complaints from customers and other market participants about the potential impact the combined businesses could have on the choice of feed suppliers as well as on feed prices.
ForFarmers and 2Agriculture today said they continue to believe that the merger would have made for a robust business, with improved expertise and presence across species, to successfully meet the changing demands from the entire value chain: “This included helping farmers realize the transition towards a more sustainable way of farming with enhanced returns. The proposed joint venture would have invested in driving improvements and optimizing services in the most efficient manner, with a focus on further improving production efficiency and feed quality to the benefit of both farmers and end consumers."