Egg giant finally set to unscramble
The long-awaited break-up of egg giant Noble Foods is finally expected at the end of this month following a long period of protracted negotiations.
Talks have been progressing for months, but a source close to the negotiations this week said: “The deal is set to complete by the end of this month. There’s only been one buyer in the frame for a while but I believe the delay can be put down to the same one that’s delayed a few acquisitions lately: getting sufficient funding post credit crunch.”
Noble Foods was formed in late 2006 by the merger of Deans Food Group and Stonegate Farmers, creating a business controlling almost half of the UK’s egg production.
However, the Competition Commission argued that the merger would lead to a lessening of competition and last year ordered Noble to sell Stonegate’s parent company Clifford Kent Holdings.
The source declined to comment on how much the Stonegate sale was likely to raise, but uncertainty over rocketing feed costs - the biggest input cost in egg production - are believed to have made it difficult to define an appropriate price. Insiders had hoped the sale would be clinched at the end of February.
However, a spokesman from the Competition Commission said: “The undertakings setting out the conditions of sale were signed off in October so whilst it’s been a few months since then, that’s not an excessive period of time for a divestment.”
He added: “In general, in these situations, we do set deadlines for companies to complete divestments themselves (although we don’t make these public as it can disadvantage the vendor); otherwise an independent trustee can be appointed to carry out the sale. However this period can be extended if the companies concerned can point to a good reason for the delay.”
Deans was roughly three times the size of Stonegate prior to the merger, with annual sales of £314M against £103M.
Egg producers have been hit particularly hard by rising feed costs as the cost of feed represents a larger proportion of overall costs compared with livestock such as beef cattle.
