Hungary has blocked the proposed acquisition of dairy company Alföldi Tej by an overseas consortium on the grounds it would pose a risk to food security.
A government statement issued on behalf of the Ministry of National Economy said a takeover approach for the business was received in June from what was described as a “foreign-owned group of companies”.
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None of the interested parties were named as the Ministry said it had “banned the acquisition”, adding the “security of food supply for Hungarian families is paramount and the transaction would have posed a significant risk to it”.
As a compromise, the government said Alföldi Tej had proposed moving the dairy cooperative into state ownership under the same conditions as those planned under the overseas takeover approach.
The proposal is being considered by government authorities, according to the statement.
Just Food has asked Alföldi Tej to comment on the two sets of proceedings and whether it was able to reveal the interested parties from abroad.
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By GlobalDataHungary’s Ministry of Agriculture and the dairy industry representative body, the Milk Product Council, or Tej Terméktanács, have agreed with the government’s conclusions over the food security risk and backed the banned takeover from overseas.
Alföldi Tej accounts for almost 20% of the domestic raw milk purchases from local farmers, the government statement noted.
“Due to its significant market share, foreign ownership could cause significant market disruption in domestic milk production and purchases, as well as a high risk of security of supply,” it said.
“If the Hungarian-owned Alföldi Tej Kft were to fall into foreign hands, the performance of the domestic processing industry would decrease: raw milk would be exported and dairy products produced abroad would be purchased at higher prices than before, and well-known and popular products would disappear from the shelves of domestic stores.”
Alföldi Tej owns two main dairy brands, Magyar Tej and Riska, complemented by the smaller lines of Pure Milk and the Mesés brand targeted at children.
The co-op operates two dairy plants in Székesfehérvár and Debrecen and employs more than 700 local people, according to its website.
The product line-up includes fresh and UHT milk, milk powders, cream, kefir, yogurts and cheese.
It processes around 270 million litres of milk annually supplied by 59 farmers.
