The merger between Gutsche Family Investments, which controls Woodlands Dairy, and local peer Fairfield Diary has been conditionally approved by competition officials in South Africa.

The transaction, announced as a merger but in practice the acquisition of Fairfield Dairy by GFI, is to take place in phases.

When the two sides first notified the regulator of their planned transaction, they said it would be carried out in three stages: an initial stake, then majority control, then a final option that would give GFI full ownership of Fairfield Dairy.

However, while competition officials were studying the plan, the companies tweaked their agreement in a such a way that effectively gave GFI full control at the second stage.

South Africa’s Competition Tribunal has said the companies must carry out the revised project within two years of the transaction being approved. “The [Competition] Commission’s view is of the view that, within this period, it is unlikely that market conditions could substantially change.”

A second condition on the deal is no staff should be “retrenched” for two years after the deal is completed.

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By GlobalData

Based in the Eastern Cape dairy region of Humansdorp, Woodland Dairy is one of South Africa’s largest UHT milk producers under its First Choice brand. The company, which began in 1995 as a packaging plant for milk produced by Woodland Farm, owned by the Gutsche family, also processes, produces and packages “high-quality” dairy products for retailers Spar and Woolworths.

Fairfield Dairy’s factory is located in the Kwa-Zulu Natal Midlands region inland of Durban, and produces yogurt, low-fat flavoured milk and fruit juices. The company supplies house brands for Spar, Woolworths Holdings and Pick n Pay.