Probe into acquisition of Arrabawn assets

A full investigation into the proposed acquisition of certain assets of the Nenagh headquartered Arrabawn Dairies by a Sligo based dairy ingredients company, Aurivo, is to be carried out by the Competition and Consumer Protection Commission.

The competition watchdog is set to launch an extensive Phase 2 investigation into the proposed deal.

The commission will look to establish if the acquisition would lead to “a substantial lessening of competition in the State”.

Aurivo wants to acquire Arrabawn’s business for the supply of branded and unbranded liquid milk, as well as cream and butter products.

Aurivo sells dairy ingredients and products, such as powders and fresh milk. The business owns the Connacht Gold and Organic For Us brands.

It also operates agri-retail outlets which sell animal feeds and other agricultural goods.

Employing over 650 people, Aurivo has an annual turnover of €570.3m.

Arrabawn, formerly known as Nenagh Co-Op, and operating the north Tipperary capital town for over a century, sells dairy products, food ingredients and animal feed.

It also operates some retail stores, including one at Tyone, Nenagh, and in Newport, while its head office is located at Stafford Street, Nenagh, on the site where the former Nenagh Co-op Creamery existed for decades.

Arrabawn has revenues of around €365m, with over 370 employees.

The proposed acquisition was originally announced in August last year.

The board of directors at Arrabawn confirmed at the time that it had accepted an offer to sell its liquid milk sales book to Aurivo.

Arrabawn said at the time that milk supply and upcoming liquid milk contracts would not be impacted by this decision.

Speaking last August, the Irish Co-operative Organisation Society welcomed the acquisition.

“It will allow Aurivo to achieve even greater scale and reach in their consumer food business,” President James O’Donnell said.

“It will also allow Arrabawn the opportunity to focus on their core manufacturing business which has been transformed in recent times, particularly with the recent investment of €30m in the Nenagh plant.”

The move to a Phase 2 investigation by the competition watchdog follows an extended Phase 1 review period which commenced in February when the Commission was first notified of the proposed acquisition.

A final decision on the deal could take up to 135 days, according to the Commission.

Third parties are being asked to make submissions before August 2.

FRUSTRATION

At the time the proposed acquisition was announced in August last year farm organisations reacted with frustration to the decision of Arrabawn to sell its liquid milk sales book to Aurivo and close it processing plant at Kilconnell, resulting in an uncertain future for workers in its East Galway facility.

Irish Farmers’ Association Liquid Milk Chairman Keith O’Boyle, speaking after the announcement of the deal almost a year ago, described Arrabawn's decision to exit its liquid milk business as “a serious indictment of the liquid milk sector”.

“IFA has been highlighting the precarious situation of the liquid milk business for the last number of years and this is now playing out with Arrabawn leaving the sector,” he said at the time of the deal.

Reacting to the announcement, the Irish Creamery Milk Suppliers Association (ICMSA) said the end of processing at the Kilconnell plant was “a major disappointment”.

In August last year Arrabawn said redundancy packages would be available for some staff who would loose their jobs at Kilconnell.

“Milk supply and upcoming liquid milk contracts will not be impacted by this decision, Arrabawn said in its statement.

At the time Arrabawn said its priority was to support all employees and suppliers during the transition to Aurivo.

The decision to close the Kilconnell plant was a huge blow to the area, local TD Denis Naughten said, describing the development as “devastating news”.