ORRVILLE, OHIO – It didn’t take long. Conagra Brands, Inc. By JM Smucker Company By Federal Trade Commission. The two companies canceled the deal, a day after announcing their intention to halt the acquisition of the Wesson oil business. The two companies had agreed to a transaction in May 2017 at a purchase price of $285 million.
“While we disagree with the FTC’s conclusion, we have mutually determined with ConAgra that it is not in the best interest of either party to spend the anticipated significant additional time and resources challenging the FTC’s administrative complaint.” Mark Smucker, CEO, said Smucker’s. “We believe the FTC has underestimated the important role of private label brands in the oil category, which accounts for approximately 50% of all cooking oil sales and holds a significantly higher market share in some retailers.
“We believe that the FTC underestimated the important role private label brands play in the oil category.” – Mark Smucker, JM Smucker
“This transaction was expected to provide significant cost synergies to ensure that branded oil products remain competitive in the market. We are committed to providing value to our consumers and customers with our Crisco brand and oil business.”
On March 5, the FTC filed an administrative complaint stating that Smucker’s acquisition would significantly reduce competition or create a monopoly in violation of the Clayton Antitrust Act of 1914. Agency employees were authorized to obtain temporary restraining orders and preliminary injunctions in Federal. Court to prevent the completion of the transaction.
A major issue raised by the FTC was the claim that if the deal is completed, Smucker would control at least 70% of the market for branded canola and vegetable oils sold at retail through the Crisco and Wesson brands. The agency said Smucker’s internal documents cited an end to price competition between Crisco and Wesson as a key argument for the acquisition.