European Union Gives Tetra Laval The Green Light To Acquire Sidel

The European Commission has allowed packaging giant Tetra Laval to complete its acquisition of stretch blow molding machine maker Sidel, ending nearly two years of antitrust wrangling. However, the decision is conditional on the licensing to competitors of Tetra Fast, a novel stretch blow molding technology for bottles being developed by Tetra Pak, Tetra Laval’s aseptic beverage packaging manufacturing unit.

Sidel officials say the decision marks a crucial step in the life of the company, and they expect Tetra Laval will aid its recovery from negative profitability in 2001. Last year, Sidel, in Octeville sur Mer, France, reported improvements in both sales and earnings, and the company finished the year with positive profitability. Sidel will remain an independent firm, said Tetra Laval chairman Larry Pillard, in a statement.

In addition to blow molding equipment, Sidel manufactures complete systems for bottle blowing, filling, and handling. The company is looking to sell its non-core businesses, which include tube-filling machinery and palletization equipment.

Tetra Pak has said it will license other proprietary stretch blow molding technologies, which may refer to its two plasma-coating processes. The firm also pledged to not re-enter the preform molding market for at least five years. Last year, Tetra Laval sold most of its preform molding division to appease monopoly concerns, keeping only its stake in a joint venture in the Middle East. It also unsuccessfully tried to sell its stretch blow molding machine business. The company also has a dairy machinery division, DeLaval.

In October 2001, the EU negated Tetra’s purchase of 90% of Sidel, citing hindrance of competition on aseptic carton packaging and bottle blow molding equipment for such packaging in Europe. Tetra Pak controls over 50% of the global aseptic carton market, and Sidel accounts for about 40% of the world’s stretch blow molding machine market. Tetra Laval was able to overturn the ruling last October on appeal.

Currently still in developmental stages, Tetra Fast uses a hydrogen/oxygen reaction to create an explosion within the heated preform to expand it. The process is said to speed bottle processing, as well as sterilize the containers, which could yield substantial cost-savings during aseptic-filling. The EC learned of the Tetra Fast technology in the course of its investigation.