The Office of Fair Trading (OFT) revealed that the firm, owned by food magnate Ranjit Boparan, had agreed to offload the business in a bid to push through the Brookes Avana deal, which was agreed in December last year.
2 Sisters acquired the Matthew Walker business, based in Derby, following its £341M purchase of Northern Foods in January last year.
Boparan Holdings also now owns the Brookes Avana Christmas pudding manufacturing site in Newport, following the £30M deal with Premier.
Sparked fears
But this has sparked fears from the OFT that the deal could lead to significant price rises for consumers over the festive season.
Amelia Fletcher, OFT chief economist, said: “This merger brings together the two main suppliers of Christmas puddings to the major grocery retailers in the UK and although these puddings might only be purchased once a year, total sales are over £40M a year.
“We are concerned that this loss of competition could ultimately lead to price rises for consumers at a time of year which is already very costly for families. The OFT is now considering the remedy offered by the parties to remove these competition concerns.”
Fletcher also confirmed that referral of the Brookes Avana deal to the Competition Commission would be suspended while the undertakings are in place.
Boparan Holdings was unavailable for comment at the time of publication.
The OFT originally invited written representations on “any competition or public interest” issues relating to the deal in January.
Competition issues
But despite some experts predicting no competition issues arising from the acquisition, one unnamed analyst told FoodManufacture.co.uk that there may be “some risk”.
He warned that any potential problems would fall at the feet of Boparan Holdings, however, despite the firm’s plans to keep Brookes Avana separate from the 2 Sisters business.
His thoughts were echoed by Julian Wild, food group director at law firm Rollits, who revealed that competition issues can sometimes arise following an acquisition such as this.
He told FoodManufacture.co.uk: “It is not impossible for the competition authorities to divest a deal after it has been completed. And generally these things are taken into account before the deal is completed. In this case time wasn’t on 2 Sisters’ side as they were keen to push the deal through.”
He also cited the example of Kerry Group’s acquisition of Headland Foods last year as an example of a deal being referred after completion.