Nestle SA, the world's biggest foodmaker, received European antitrust approval for its US$11.9 billion purchase of Ralston Purina Co after agreeing to give up dog and cat-food brands in three countries.
The purchase, which has yet to be passed by US authorities, would make Nestle the leader of the US$25 billion pet-food industry.
Vevey, Switzerland-based Nestle agreed to sell or license products in Spain, Italy and Greece to allay EU concerns.
"I don't see why they should not get approval in the US," said Stephanie Gerrard, who helps manage ?30 billions (US$43 billion) at Aberdeen Asset Management Plc and holds Nestle shares.
"We're pleased that Europe has been approved."
The purchase would allow Nestle to overtake Mars Inc even after the family-owned maker of Pedigree this month agreed to buy Royal Canin SA of France, Europe's No. 1 maker of dry pet foods, from BNP Paribas for 1.5 billion euros (US$1.3 billion.) Nestle's shares rose SF7, or 1.9 percent, to 369.
Ralston fell US$0.06 to US$31.94.
The EU was originally due to rule July 18 and extended the review by two weeks after Nestle proposed concessions.
"The fact that there was a hiccup reminded investors that it's not a done deal in the US," said Anne Alexandre, an analyst at HSBC who has a "hold" recommendation on Nestle shares. She said she expects the purchase to win US approval on conditions such as the sale of some dry-cat-food brands.
The US likely will give approval with requirements that the companies sell some ``fairly sizable'' businesses, AG Edwards & Sons Inc. analyst Christopher Growe said. He wouldn't speculate what those might be.
"The outlook for the US antitrust review is murky at best," Growe said. He has a "reduce" rating on Ralston's stock.
The package of concessions agreed in Europe "offers a viable solution and is in the interest of consumers," the European Commission said in a statement.
"Nestle welcomes this decision, which confirms the process of completing the merger is well set for a successful conclusion by the end of the year," said spokesman Francois Perroud. He said Nestle he didn't know the value of the concessions.
The Swiss company must now overcome opposition by farmers and consumer groups. They say the acquisition, which would give Nestle 45 percent of the US cat-food market and 40 percent in dog food, will result in higher prices and fewer choices.
The American Antitrust Institute, the National Consumers League and Farmers' organizations have lobbied the US Federal Trade Commission, which isn't expected to rule for several months.
Albert Foer, president of the American Antitrust Institute, said the FTC should consider whether the acquisition would affect what he called "category captaincy."
Retailers, he said, often pick a lead supplier to provide information that helps them decide how to allocate shelf space.
BUSINESS UPDATE: The iPhone assembler said operations outlook is expected to show quarter-on-quarter and year-on-year growth for the second quarter Hon Hai Precision Industry Co (鴻海精密) yesterday reported strong growth in sales last month, potentially raising expectations for iPhone sales while artificial intelligence (AI)-related business booms. The company, which assembles the majority of Apple Inc’s smartphones, reported a 19.03 percent rise in monthly sales to NT$510.9 billion (US$15.78 billion), from NT$429.22 billion in the same period last year. On a monthly basis, sales rose 14.16 percent, it said. The company in a statement said that last month’s revenue was a record-breaking April performance. Hon Hai, known also as Foxconn Technology Group (富士康科技集團), assembles most iPhones, but the company is diversifying its business to
Apple Inc has been developing a homegrown chip to run artificial intelligence (AI) tools in data centers, although it is unclear if the semiconductor would ever be deployed, the Wall Street Journal reported on Monday. The effort would build on Apple’s previous efforts to make in-house chips, which run in its iPhones, Macs and other devices, according to the Journal, which cited unidentified people familiar with the matter. The server project is code-named ACDC (Apple Chips in Data Center) within the company, aiming to utilize Apple’s expertise in chip design for the company’s server infrastructure, the newspaper said. While this initiative has been
GlobalWafers Co (環球晶圓), the world’s No. 3 silicon wafer supplier, yesterday said that revenue would rise moderately in the second half of this year, driven primarily by robust demand for advanced wafers used in high-bandwidth memory (HBM) chips, a key component of artificial intelligence (AI) technology. “The first quarter is the lowest point of this cycle. The second half will be better than the first for the whole semiconductor industry and for GlobalWafers,” chairwoman Doris Hsu (徐秀蘭) said during an online investors’ conference. “HBM would definitely be the key growth driver in the second half,” Hsu said. “That is our big hope
The consumer price index (CPI) last month eased to 1.95 percent, below the central bank’s 2 percent target, as food and entertainment cost increases decelerated, helped by stable egg prices, the Directorate-General of Budget, Accounting and Statistics (DGBAS) said yesterday. The slowdown bucked predictions by policymakers and academics that inflationary pressures would build up following double-digit electricity rate hikes on April 1. “The latest CPI data came after the cost of eating out and rent grew moderately amid mixed international raw material prices,” DGBAS official Tsao Chih-hung (曹志弘) told a news conference in Taipei. The central bank in March raised interest rates by