Italy’s regulator approves conditional merger between Sammontana, Forno d’Asolo

ITALY – Italy’s competition authority has conditionally approved the merger between gelato supplier Sammontana and frozen baked goods manufacturer Forno d’Asolo, a significant development in the food industry. 

The Autorità Garante della Concorrenza e del Mercato (AGCM) initially blocked the merger in May due to concerns over competition erosion. 

 However, on July 26, 2024, the AGCM announced it would allow the transaction to proceed if certain conditions were met.

 The merger was initially unveiled in February when the Bagnoli family, founders of Sammontana, announced their partnership with investment management group Investindustrial to acquire Forno d’Asolo from private equity firm BC Partners. 

 The Bagnoli family, Investindustrial, and the management team would wholly own the new entity. It aims to create a powerhouse in the frozen food sector.

 The AGCM’s decision to block the merger stemmed from fears that it would significantly diminish competition in the frozen breakfast bakery products market. 

 The regulator expressed concerns that the merger would create a combined business with a market share four times larger than its nearest competitor, potentially leading to consumer price increases. 

 In its statement, the AGCM noted, “The investigation carried out by the Authority made it possible to ascertain the existence of a national market for frozen bakery breakfast products, in the foodservice channel, distinct from both fresh products and other types of bakery products.”

 To address these concerns, the AGCM has mandated the divestment of a segment of Forno d’Asolo’s operations. 

Specifically, the regulator requires selling a portion of the frozen baked goods business to a competing operator, ensuring the buyer possesses its production facilities and distribution capabilities.

 Additionally, Sammontana must terminate its gelato supply contracts with Froneri, an ice cream company partially owned by Nestlé.

 The AGCM outlined several conditions for the merger’s approval. Among them is the transfer of current concession contracts between Forno d’Asolo and Froneri to distribute ice cream and bakery products in Italy. 

 Furthermore, the AGCM has stipulated that the successor company must be able to utilize Forno d’Asolo’s agents to sell these products without obstruction.

 The regulator also imposed restrictions on the merged entity’s operations in regions where it would hold a competitive advantage, such as Friuli Venezia Giulia, Trentino Alto Adige, and Tuscany. 

 The AGCM stated, “The Authority has imposed – for a period of five years extendable by a further five years – measures to eliminate or not provide for exclusivity for the sale of bakery products for the former frozen breakfast.”

 Forno d’Asolo is a significant player in the frozen food market, generating approximately €500 million(US$541M) in sales and over €85 million (US$91.9M) in EBITDA in 2023. 

 The merger, expected to create a combined entity with around €1 billion (US$1.083B) in revenues, will enhance the production capabilities across Italy, the United States, and France.

 As the merger moves forward, Just Food has contacted Investindustrial and Forno d’Asolo for their response to the AGCM’s conditions. 

 The outcome of this merger could reshape the competitive landscape of the frozen food industry in Italy, significantly impacting consumers and market dynamics.

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