After 15 takeovers, the Dutch watchdog thinks it is time for additional investigation into the Belgian pallet group

After Foresco has already made 15 acquisitions of small Dutch pallet sellers, the Belgian group is now encountering additional investigations from the Dutch competition authorities. However, CEO Jan Ponnet expects that the latest acquisition will also be given the green light.

The wooden pallet manufacturer Foresco Packaging from Genk announced around the turn of the year that it wants to acquire a Dutch competitor, consisting of the two companies DWP and Vierhouten. But that deal has been put on hold by the Dutch competition watchdog ACM. The regulator says it will further investigate the takeover because it may have a negative impact on competition.

In the past, Foresco has made many acquisitions in the Netherlands and has always received the green light from the ACM. Now the watchdog points out that Foresco is already the largest seller of new wooden pallets in the Netherlands and that this new deal strengthens a possible dominant position of Foresco. With a turnover of 300 million euros, the Netherlands accounts for around two-thirds of the group turnover.

It is notable that the competition watchdog refers to the many acquisitions of often small companies that Foresco made, which did not have to be submitted to the competition watchdog for approval. Of the 15 acquisitions in the Netherlands that Foresco has made since 2019, the ACM has assessed only four. The eleven other deals passed without scrutiny because they fell below the reporting thresholds.

This so-called ‘stringing of beads’, a succession of much smaller deals, has been a thorn in the side of the Dutch competition watchdog for some time. After all, mergers or acquisitions only have to be reported to the ACM if both the acquirer and the prey each have an annual turnover of 30 million euros in the Netherlands. Private equity in particular is ‘stringing its teeth’ in the Netherlands, ACM chairman Martijn Snoep previously warned in an interview with the business newspaper Het Financieele Dagblad. He believes that even small takeovers can lead to positions of power and can therefore have a bad outcome for people and companies.

It is remarkable that the watchdog wants to show its teeth in this file. Foresco CEO Jan Ponnet thinks that the ACM’s assertive communication is related to a broader debate in the Netherlands, surrounding strong consolidation in the healthcare sector. The competition authorities were unable to have a say in many takeovers of medical practices and daycare centers.

In the past, Foresco was given the green light for the larger Dutch deals that were registered, and Ponnet expects the same for DWP and Vierhouten. “We will be judged on our merits,” says the CEO. He expects that the procedure could take a number of months.

Foresco Packaging’s takeover engine was also running at full speed in our country. Last week, the group completed the takeover of the family business Paletten Andries from Sint-Katelijne-Waver, which employs 35 employees. Earlier this year, Foresco also acquired Pallets.be from Zonhoven.

And with the recent takeover of Caisseries Belle-Vue, Foresco also took its first step into Wallonia. The activities also go a bit further than the classic pallets. “The company from Fleurus, near Charleroi airport, is active in more complex packaging activities, with cardboard packaging, boxes and crates,” Ponnet explains.

The company also delivers in Flanders and Northern France. Is this a first step towards the French market? ‘We first focused on Belgium and the Netherlands and are still looking at what steps we will take in terms of geographical expansion. We will continue with our oil patch strategy, but it has not yet been decided whether it will go north, east or south.’ The group already has small activities in Germany, an offshoot of a previously acquired company in the Netherlands.

The enormous growth trajectory at Foresco started when the company came into the hands of the holding company Dynamica, which is owned by Ponnet and Cedric De Quinnemar. Despite the many acquisitions, Foresco’s turnover, which employs 1,700 employees, declined last year. The consolidated turnover amounted to 454 million euros, a slight decrease compared to 460 million euros in 2023.

The main reason is the significantly lower wood prices, which play an important role in the price of new wooden pallets. But there was also a decline in volumes. “The lower industrial output and the reduction of inventories are directly reflected in the volumes of physical pallets,” says Ponnet. He indicates that the profit figures – 37 million euros in group profit in 2022 – have also fallen slightly.

In addition to Foresco, another player is busy with consolidation in the pallet sector. The French-Belgian PGS, with Belgian Luc Grauwet as CEO, achieved a turnover of 482 million euros in 2022. With offices in 11 countries, from Latvia to Morocco and the United States, that company is more geographically diversified than Foresco.