Jacobs Douwe Egberts' takeover of OldTown given the go-ahead by Singapore's competition watchdog
In December, the Dutch company offered to buy OldTown for 1.47 billion ringgit ($361m).
However, the Competition Commission of Singapore (CCS) examined the deal because both firms sell retail instant coffee mixes and instant milk tea mixes for in-home sales in Singapore.
There is also a marginal overlap between the companies in the supply of instant coffee mixes for out-of-home sale, but this was deemed to be too small in Singapore to be assessed by CCS. Most of OldTown’s 232 White Coffee chain outlets are in Malaysia.
Jacobs Douwe Egberts will now aim to take sole control over OldTown, with the watchdog ruling: “CCS concluded that 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.”
OldTown will now join Jacobs Douwe Egberts’ line-up of 27 brands across Europe, Latin America and Australia, including Jacobs, Tassimo, Douwe Egberts and Kenco.
CCS added: “In examining the impact of the Proposed Transaction on the Relevant Markets, CCS conducted a public consultation and sought feedback from intermediate customers (i.e. retailers), corporate end-customers and other competing suppliers of instant coffee mixes and instant milk tea mixes in Singapore.”
“After reviewing Jacobs Douwe Egberts’ 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.”
In clearing the proposed transaction, CCS found that the companies faced significant competition from the likes of Nestle and Unilever, and that there were few barriers to market entry for new players.
It added: “The larger intermediate customers generally have some negotiation power with the suppliers of instant coffee mixes and instant milk tea mixes, and may be able to exercise bargaining power over the merged entity post-transaction.”
This will be Jacobs Douwe Egberts’ second deal in Asia in the past 12 months, following its acquisition of Singapore-based Super Group.