EU investigates Cargill’s plans to buy German food ingredients firm |

EU investigates Cargill’s plans to buy German food ingredients firm

The European Commission said it saw possible competition problems because the two companies are among four leading suppliers of lecithin, a natural emulsifier used to make a wide range of foods.”This takeover involves two companies that are at the forefront of the production of natural emulsifiers used in particular in food products such as chocolate, bread and margarine,” said EU Competition Commissioner Neelie Kroes.”The Commission must ensure that this operation will not detrimentally affect customers like food manufacturers and, consequently, European consumers.”Chemicals company Degussa agreed in September to sell the unit – which makes colorings and sweeteners for candy, beverages and other foods – to Cargill for 540 million euros ($670.6 million), saying it wanted to focus on its core business.The Commission has until May 3 to decide if the takeover would harm competition in Europe.It said the deal might cut down the range of lecithin suppliers for food manufacturers. The new company could be particularly strong as a supplier of non-genetically modified lecithin, which is becoming more important as EU legislation demands GM ingredients be clearly labeled.Lecithin is usually made from soy beans and is used to make chocolate and bakery products.A 2004 report from Frost & Sullivan analysts said the European lecithin market was worth 49 million euros in 2003. Cargill said it does not usually release information on its market share.The deal is Cargill’s biggest acquisition since 2002, when it bought Cerestar, a French maker of starches and sweeteners, for 1.2 billion euros.The Degussa unit employs nearly 2,100 workers and had sales of 441 million euros in 2004. Degussa employs a total of 45,000 workers worldwide and last year posted sales of 11.2 billion euros.Cargill, the biggest privately held company in the U.S., employs more than 124,000 workers in 59 countries and posted sales of $71 billion (57.2 billion euros) in its latest fiscal year.It is the biggest grain producer in the United States and its Excel meatpacking unit is one of the country’s biggest. Its brands include Diamond Crystal salt, Gerkens cocoa and Sterling Silver fresh meats.—On the Net:http://www.degussa.dehttp://www.cargill.comVail, Colorado

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