U.S. Sues to Block Louis Dreyfus Deal to Sell Imperial Sugar (2)

Nov. 24, 2021, 5:51 PM

U.S. antitrust officials sued to block Louis Dreyfus Co.’s deal to sell its Imperial Sugar unit to closely-held U.S. Sugar.

The Justice Department said in a statement Tuesday that the tie-up would leave 75% of refined sugar sales across the Southeast in the hands of just two mega-producers, leading to higher prices.

“This deal substantially lessens competition at a time when global supply chain challenges already threaten steady access to important commodities and goods,” said Jonathan Kanter, the head of the department’s antitrust division.

The lawsuit is the latest in a string of cases by the Justice Department to stop mergers amid a push by the Biden administration to toughen antitrust enforcement. It has sued to block Penguin Random House’s deal to buy publisher Simon & Schuster, as well as American Airlines Group Inc. and JetBlue Airways Corp. for their agreement to coordinate flights in the U.S. Northeast.

Rotterdam-based Dreyfus, one of the world’s top five sugar traders, announced the deal in March. Financial terms of the proposed transaction with Clewiston, Florida-based U.S. Sugar weren’t disclosed.

Louis Dreyfus said in a statement it was disappointed with the Justice Department’s decision to challenge the sale and that the parties are preparing to litigate.

“We firmly believe the sale will create production, logistics and supply chain synergies and efficiencies that will benefit U.S. consumers,” Dreyfus said.

U.S. Sugar said in a statement that it disagreed with the decision, and “fully intends to litigate this matter.”

The acquisition “will result in increased production and distribution of refined sugar” and provide more secure supplies, U.S. Sugar said. “This transaction will improve supply chain logistics and will not result in higher prices or any harm to customers and consumers.”

The three companies that dominate the southeastern U.S. sugar scene are Imperial Sugar, U.S. Sugar and American Sugar Refining Inc., which is the world’s biggest refiner and marketer of cane sugar, and owns the Domino brand.

Dreyfus acquired Imperial Sugar in 2012. The unit currently operates a cane-sugar refinery near Savannah, Georgia, and a sugar transfer and liquification facility in Kentucky. The transaction would include Imperial’s consumer-facing brands.

U.S. Sugar is one of four owners of United Sugars Corp., a cooperative that sells and sets prices for all sugar produced by U.S. Sugar and three other sugar refiners. The four owners of United don’t compete with one another, according to the complaint. United manages the sale and marketing of its owners’ sugar, including deciding whether to submit a bid for a particular customer and what price to charge, the government said.

(Updates with comment from LDC in sixth paragraph. An earlier version of the story was corrected to show that U.S. Sugar is one of four owners in the consortium)

--With assistance from Andy Hoffman.

To contact the reporters on this story:
David McLaughlin in Washington at dmclaughlin9@bloomberg.net;
Marvin G. Perez in New York at mperez71@bloomberg.net

To contact the editors responsible for this story:
Sara Forden at sforden@bloomberg.net

Lydia Mulvany

© 2021 Bloomberg L.P. All rights reserved. Used with permission.

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