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March 31, 2022

Medina, Freshways dairy merger cleared by UK competition regulator

With the competition hurdle overcome, the companies expect the merger to be finalised this summer.

By Simon Harvey

The UK’s competition body has cleared the merger of Medina Dairy with Freshways Dairy after putting the proposed deal under the microscope in February.

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Medina, based in Windsor, Berkshire, and Freshways in London operate in similar categories such as fresh milk, butter, cheese, eggs, bread and juices. While the planned merger was revealed last July, the Competition and Markets Authority (CMA) said the business combination has been in “contemplation since at least May 2019”.

After reviewing Medina’s financial accounts over the last five years, the CMA noted the company has been in “financial difficulty since at least 2018” and has approved the deal with Freshways in the face of no other viable alternative for the business.

The CMA said Medina had undertaken a number of initiatives with Freshways since 2018, including “rationalising its distribution network” through depot closures and entering into distribution arrangements with the partner company. It has also outsourced processing and packaging of milk to Freshways and set up a joint purchasing agreement for bread and dairy products.

Medina also secured an GBP8m (US$10.5m) loan from Freshways in January last year.

When the planned merger was announced last summer, the companies said a combination would “create the basis for a viable, long-term, fresh-liquid milk business”. And post-transaction would form “a business with the requisite scale and agility to compete with the two large players which dominate the dairy sector in the UK” – Arla Foods and Müller.

Together, the new company would have a turnover of around GBP400m and employ 1,000 staff.

Explaining its decision, the CMA said it found “Medina’s performance has continued to deteriorate since 2018 despite significant steps taken by Medina to reduce costs and improve its financial position”.

It added: “The CMA is therefore satisfied that Medina has exhausted all realistic means of restructuring itself successfully to avoid exit in the near future if the merger does not proceed.

“The CMA considers that it is unlikely that there would be any alternative purchasers for the Medina business that would operate the business as a competitor in the event that the merger does not proceed, given, as discussed above, its deterioration since at least 2018, lack of access to external financing and failed attempts to restructure.”

Freshways, owned by Nijjar Group Holdings, and Medina both supply the retail and foodservice channels.

Sheazad Hussain, the CEO of Medina’s parent company Medina Holdings, said: “We are pleased with the CMA’s decision and look forward to developing a sustainable and progressive dairy business that will be in the interest of our respective entities, our customers, employees, suppliers and the British dairy farmers that supply us.

“Both parties will now move forward as quickly as possible with the final necessary steps to bring about the merger which we envisage will be completed by early summer 2022.”

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Disruptive start-ups to watch out for

2021 was a record-breaking year, with more businesses breaking into the billion-dollar club. Many start-ups have achieved or retained the unicorn status by the end of the year to reflect nearly a fivefold growth from that in 2020. This boom can be linked to a financing frenzy spurred by the quick adoption of technology and innovative solutions by start-ups gaining traction in response to the pandemic. However, the start-up ecosystem is now facing turbulent times for fundraising as investors seek long-term business strategies, valuations, and a route to profitability amid uncertain market circumstances. Nevertheless, 2022 has the potential to carry forward the momentum with multiple entities having a fair chance of being in the right place when aided by the right technologies. GlobalData leverages the power of alternative data to examine the health of start-ups across multiple dimensions including the quality of their innovations, market presence, and the funding they can attract. This helps our clients to analyze the disruptive potential of start-ups for early alliances, investments, and acquisition prospects to develop future-proof strategic roadmaps for a competitive advantage. Read our report and gather insights on the following topics:
  • Recent Unicorn trends
  • Unicorns in 2022
  • Future Unicorns
  • Start-ups to watch out for
Start-up ecosystem outlook by top geographies
by GlobalData
Enter your details here to receive your free Whitepaper.

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