MALAYSIA – The world’s number one pure-play coffee maker Jacobs Douwe Egberts has received regulator approval for the acquisition of Malysian coffee producer Old Town
In a deal worth US$361 million the Competition Commission of Singapore (CSS) has approved the buy out by JAB Holdings owned company of the Malaysian company in its bid to dominate the global coffee business.
The CSS had raised concerns that the merger would dominate the coffee segment prompting it to launch an investigation and public consultation to get feedback from retailers and suppliers of instant coffee and milk tea mixes.
JDE will assume Old Town’s café chain operations and the manufacturing, marketing and sales of coffee and other beverages, including instant coffee mix, instant milk tea mix, instant chocolate mix and roasted coffee powder.
Jacobs Douwe Egberts (JDE) is owned by the investment firm JAB Holdings, serving coffee and tea products through its iconic brands including Jacobs, Tassimo, Moccona, Senseo, L’OR, Douwe Egberts, Super, Kenco, Pilao & Gevalia.
According to ‘GlobalCoffeeReport’ magazine, the Chairman of JAB Holding had mentioned that the company was intending to continue expansion in the industry through various acquisitions in the coffee industry.
This marks the second acquisition by JDE in Asia after it completed acquisition of Super Group Limited, to, serve high quality products to customers and consumers in Asia.
“After reviewing JDE’s submissions and the feedback received, CCS concluded that the proposed transaction, if carried into effect, will not infringe the prohibition in the act against anti-competitive mergers.
The proposed transaction, if carried into effect, will not lead to a substantial lessening of competition in the supply of instant coffee mixes and instant milk tea mixes for in-home sales in Singapore,” said the CCS report.
The authority further reported that the parties were likely to face competition from a number of suppliers in the market for the supply of instant coffee mixes for in-home sales in Singapore due to a multiple brands of instant coffee mixes for consumers to choose from, such as Nescafé, Gold Roast and Alicafe.
The merger would also battle with other market suppliers such as Unilever who produce instant milk tea mixes for in-home sales in Singapore.
The acquisition together with Super Group’s established coffee industry in Asia has strengthened JDE’s position in the coffee industry in Asia.