August 11, 2008

EU Probes Arsenal’s Acquisition of Chemical Manufacturer DSP

EU probes Arsenal's acquisition of chemical manufacturer DSP

BRUSSELS, Aug. 7 (Xinhua) -- The European Commission on Thursday opened an in-depth investigation into the planned acquisition of the Dutch manufacturer of basic chemicals DSP by U. S. equity company Arsenal.

The commission said the acquisition raised concerns that it would reduce competition on the markets of some basic chemical inputs for the food and drink industry and for industrial intermediate products due to Arsenal's control of Velsicol Chemical Corporation.

Both Velsicol and DSP are active in the manufacture of benzoic acid and sodium benzoate.

The commission's initial market investigation found that the proposed transaction raised serious doubts as to its compatibility with the EU rules as the merged entity would potentially have very high market shares on the benzoic acid and sodium benzoate markets.

Benzoic acid is used as an antimicrobial preservative in food and drinks, in animal feed, in pharmaceutical products, to produce other chemicals, in paints and coatings and in personal healthcare.

Sodium benzoate is used primarily as an antimicrobial preservative in food and soft drinks, but is also used in pharmaceutical products, the automotive industry, personal care, household cleaning products and pyrotechnics.

DSM agreed in March to sell off its specialist food chemicals unit to New York-based Arsenal Capital Partners for an undisclosed price. An EU approval was expected until Dec. 11.

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