Antitrust Law Daily Wrap Up, ACQUISITIONS & MERGERS NEWS: European Commission conditionally greenlights Constantia's acquisition of Aluflexpack, (Jan 30, 2025)

By Kenneth H. Ryesky, M.B.A., J.D.

EC's concerns over competition barriers imposed by initial merger plan were successfully addressed by commitment to divest from the wet pet and human food sterilizable business.

The European Commission announced that it has approved the proposed acquisition of Aluflexpack AG by Constantia Flexibles GmbH, subject to commitments offered by the parties. The Commission found that the transaction would have reduced competition in the markets for the supply of sterilisable aluminium containers and lids for wet pet food and certain human foods. To address the Commission's competition concerns, the parties offered to divest the entirety of Aluflexpack's wet pet and human food sterilisable business in the EEA, including all assets and personnel currently part of Aluflexpack's production plant Omial Novi in Croatia.

Although aluminum is one of the most common chemical elements in the earth's crust, it exists there as a component of some chemical compound. Aluminum was never rendered in its pure metallic state prior to the early Nineteenth Century, and until the middle of that century was a precious metal more costly than gold. By the end of the Nineteenth Century, the cost of metallic aluminum precipitously dropped as electrolytic refinement processes were developed and perfected. By 1949, the price of aluminum declined to less than one-sixth of its cost at the beginning of the Twentieth Century.

Aluminum's properties as a metal include its light weight and capacity to be rendered into a thin foil. Another desirable property of aluminum is its amenability to recycling; it is cheaper by far to produce aluminum from the recycle process than by smelting it from ores extracted from the earth. These properties make aluminum conducive to use as a packaging material for many commodities, including foods and pharmaceuticals.

One enterprise that has developed a robust business in the aluminum packaging industry is Vienna-based Constantia Flexibles GmbH (Constantia), which is solely controlled by U.S.-based One Rock Capital Partners, LLC. Constantia's products include aluminum foil covers pill blister packs, contact lenses and aluminum containers for small sensitive medical devices, and foil lids for containers of foods such as yogurt.

On February 16, 2024, Constantia announced that it had signed an agreement to acquire Aluflexpack AG (Aluflexpack), an enterprise headquartered in Reinach, Switzerland that has diverse operations in Europe, and also conducts activity in Tunisia, Turkey, and in the United States. Aluflexpack has an extensive aluminum foil product line of packaging for food products such as candies and coffee, and also for pharmaceutical capsules.

The proposed acquisition entailed Constantia's acquisition of the 57 percent of Aluflexpack's shares held by Montana Tech Components AG (MTC) and Xoris GmbH, along with a cash tender offer for the remaining shares held by the public.

On November 28, 2024, the European Commission (EC) was formally notified that the proposed acquisition would result in a market concentration. Following investigation and recept of public comments, the EC found that the acquisition as proposed would reduce competition in the sterilizable aluminum containers and lids markets, likely resulting in increased prices and more limited choices for human and pet food producers. Aluflexpack and Constantia responded to the EC's concerns by offering to totally divest Aluflexpack's wet pet and human food sterilizable business in the European Economic Area, most notably a production plant in Croatia. On January 29, 2025, the EC announced its approval of the proposed acquisition, conditioned on the divestiture.

The boards of both Constantia and Aluflexpack each recommended shareholder approval of the transaction. Constantia CEO Pim Vervaat stated that he is "delighted to welcome Aluflexpack to the Constantia Flexibles Group," and that the combination will allow Constantia "to better serve our customers through an enhanced sustainable product range supported by a fully integrated technology portfolio whilst extending our geographical reach".

Sharing Vervaat's enthusiasm, Aluflexpack CEO Johannes Steurer said, "Together with a new partner, we will continue to work on our strategy in order to create the best possible value for our customers, employees and all stakeholders, and drive innovation projects and our sustainability agenda. We look forward to our partnership with the team at Constantia Flexibles."

To which MTC CEO Dr. Michael Tojner, who had formerly owned a majority stake in Aluflexpack, added, "Together with the strong management and the motivated employees, we have succeeded in making Aluflexpack a global player in the field of flexible packaging solutions."

Companies: Aluflexpack AG; Constantia Flexibles GmbH

News: AcquisitionsMergers Antitrust