Refresco Will Work to Solve U.K. Antitrust Wrinkle in Cott Deal

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By Eleanor Tyler

Refresco Group N.V. said an initial review by U.K. antitrust authorities of its $1.25 billion purchase of rival soft drink bottler Cott Corp. Inc. turned up competition concerns in only one market.

Refresco said the purchase will create the world’s largest independent bottler with leadership positions across Europe and North America. The Competition and Markets Authority (CMA) said Jan. 3 that it will open an in-depth investigation into the transaction’s potential impact on competition in the U.K. But the company said the same day that a workable remedy to the U.K.'s competition concerns should be possible.

Refresco said that CMA’s concerns impact only juice drinks packed using a special aseptic process that allows them to be sold preservative-free and without refrigeration. The combined companies produce these products in only two factories in the U.K., one owned by each.

The deal has already cleared the U.S. and Canadian authorities. Refresco CEO Hans Roelofs said, “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 U.K.”

Buy and Build

Refresco, a large bottler based in the Netherlands, has been expanding into new regions mainly through acquisition of competitors.

It entered the North American market just a year ago through its $129 million purchase of Whitlock Packaging. The deal, completed in September 2016, had substantial customer overlap with Refresco’s European customer base. More than 80 percent of Whitlock Packaging’s volumes were for customers Refresco served in Europe.

The Cott purchase further expands Refresco’s North American reach along with growing its U.K. production. Whitlock’s facilities are in Oklahoma, Florida, and New Jersey. Cott, based in Mississauga, Ontario, will add 19 production sites in the U.S., four in Canada, one in Mexico, and five in the U.K., the company said.

Refresco is also in transition. PAI Partners SAS and British Columbia Investment Management Corp. announced a tender offer for Refresco at 20 euros a share in October. The funds, acting jointly through Sunshine Investments B.V., support Refresco’s “buy-and-build strategy,” including the Cott acquisition, the company said in a statement recommending that shareholders tender their shares for the offer.

When Refresco and Cott announced their deal in late July, they expected to close by the end of 2017. The companies have not provided a new timeline for closing. Refresco’s shareholders approved the deal in September.

To contact the reporter on this story: Eleanor Tyler in Washington at etyler@bloomberglaw.com

To contact the editor responsible for this story: Fawn Johnson at fjohnson@bloomberglaw.com

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