January 3, 2018 / 7:30 AM / 6 months ago

Refresco to offer remedies to UK watchdog concerns over bottling deal

LONDON (Reuters) - Drinks bottler Refresco RFRG.AS is willing to offer remedies to concerns voiced by Britain’s Competition and Markets Authority (CMA) over the Dutch company’s $1.25 billion (919.66 million pounds) acquisition of Cott Corp’s (BCB.TO) bottling activities.

The CMA, which has undertaken an initial investigation of the deal, said on Wednesday that it had concluded the purchase could result in higher prices or lead to lower quality standards for some juice drinks that both companies supply in the UK.

Refresco said in a separate statement that it was prepared to offer “suitable remedies” to the CMA and would fully cooperate with the watchdog. The regulator had warned that it would refer the deal for an in-depth investigation unless undertakings were made by the Dutch bottling business to assuage its concerns.

“With the clearance we received earlier in the process from the U.S. and Canadian regulatory authorities and the overwhelming support from our shareholders, we are willing to propose remedies to the CMA to address this specific issue and put us on the right track to also obtain clearance in the UK,” said Refresco Chief Executive Hans Roelofs.

Refresco agreed to buy Canada-based Cott’s production business in July in a move that bolsters its operations in the United States, the world’s biggest soft drinks market.

When the deal was announced Roelofs said that Refresco would be a “leading company in a very fragmented market and absolutely No.1 in the United States and UK”.

The juice drinks that have drawn the attention of the British regulator are made using a special aseptic production process, enabling them to be sold without refrigeration and preservatives, Refresco said on Wednesday. It added that the products are produced by two factories in the UK, one a Cott site and the other operated by Refresco.

“Only one other competitor in the UK currently supplies third parties with juice drinks using this production process,” the British regulator said. “The CMA is therefore concerned that, after the merger, the combined business might be able to increase prices or lower quality standards.”

Since striking the Cott deal, Refresco agreed to a 1.6 billion euro ($1.93 billion) takeover by a consortium led by PAI Partners, the French private equity firm, in October. It had rejected an earlier offer from PAI, in April last year, and denied that the Cott acquisition was a defensive measure against a takeover.

Reporting by Ben Martin; Editing by David Goodman

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