The Australian Competition and Consumer Commission will not oppose the proposed global acquisition of Dyno by a Macquarie Bank-led consortium and the subsequent on-sale of Dyno Nobel's European, Middle Eastern, African, Asian and Latin American businesses to Orica.
The transactions would result in the Macquarie consortium retaining Dyno's operations in Australia, New Zealand, Canada and the United States, an explosives initiating systems plant in Mexico, and DetNet, an electronic detonator joint venture in South Africa, to which Dyno is a party. In Australia, Orica and Dyno account for all sales of domestically produced ammonium nitrate* (AN) and most sales of finished explosives, initiation systems, accessories and related services.
ACCC Chairman, Mr Graeme Samuel said the ACCC made its decision based on assurances from the parties that:
- Orica will not acquire any interest in Dyno's Australian business
- Orica will not participate in any way in the operation or management of Dyno's Australian business
- following the transactions, there will be no on-going financing between Orica and the Macquarie consortium, and
- with the exception of an on-going swap arrangement for the supply of ammonium nitrate, the transactions comprise the whole of the arrangements between Orica and the Macquarie consortium".
In coming to its view, the ACCC also consulted widely with Australian customers and competitors.
A significant issue raised by market participants was whether Orica's acquisition of Dyno's AN plants in Thailand and the Philippines would have a detrimental effect upon Dyno's Australian operations.
"The ACCC considered that the amounts imported by Dyno Australia from these plants were very limited, that alternative overseas sources of ammonium nitrate are available to Dyno Australia, and that Dyno Australia has plans to expand its domestic AN capacity which the transactions are unlikely to affect", Mr Samuel said.
In addition, the ACCC considered that the transactions are unlikely to result in the removal of DN Australia as a competitor to Orica by depriving it of access to initiation systems components due to their availability from Dyno's North American and Mexican operations.
"Accordingly, the ACCC considered that the transactions were unlikely to substantially lessen competition for the supply of ammonium nitrate and for finished explosives, initiation systems, accessories and related services in western and eastern Australia", Mr Samuel said.
*Low density ammonium nitrate (commonly known as commercial or explosives grade AN) is the key feedstock for the majority of explosives used in Australia.