Campina and Friesland get merger green light

18-Dec-2008 - Last updated on 18-Dec-2008 at 11:35 GMT

Dairy co-ops Campina and Friesland are to become one at the end of this year, following competition clearance subject to conditions, and a favourable final vote by the councils of both.

The two entities first announced the plan to merge in December 2007, with a view to significantly strengthening their positions in both consumer products in Europe, Asia and Africa, and in ingredients on a worldwide basis.

Competition approval has proved a long process – although expectedly so. The approval, granted yesterday by the European Commission, is conditional on the sale of businesses in which it was felt the combined firms would have too dominant a position.

The businesses to be divested are Friesland Foods Fresh in Nijkerk, Campina Holland Cheese’s cheese production plant in Bleskensgraaf, and the Yogho Yogho and Choco Choco brands in The Netherlands and Belgium.

Some 1.2bn kg of milk will also be made available for sale each year to new and existing producers of fresh dairy and naturally matured cheese in The Netherlands, in order to reduce the group’s share of that market.

The new company, called FrieslandCampina, will consist of four business groups: Cheese & Butter, Consumer Products Western Europe, Consumer Products International and Ingredients.

The companies had already put in place a task force to start working towards the merger, which will now take place on December 30. Cees ‘t Hart, CEO of FrieslandCampina, said that the reasons for the merger are just as strong as they were a year ago.

“Now we can actually start doing business together based on our combined innovative strength and the milk expertise of our colleagues.

“We expect to be able to grow more strongly in brands and new concepts. This not only applies to consumer products, but also to dairy ingredients.”

What will change in ingredients?

Both Friesland and Campina come with ingredients activities. These are now being brought together under the new businesses group, which is geared towards value-added.

But in an open letter the businesses said the consolidation “will be a gradual process, with no major changes on the short term”.

“Until further notice, your existing business contacts will remain unchanged so you can use the same communication channels with which you are accustomed to.”

The six operating companies in the business unit are:

FrieslandCampina DMV (milk proteins and whey based ingredients);
FrieslandCampina DOMO (whey and milk based products for infant, medical, cell nutrition and pharmaceutical applications);
FrieslandCampina Kievit (encapsulates, toppings, fat powders and creamers);
FrieslandCampina Creamy Creation (alcoholic and nutritional cream based beverages);
FrieslandCampina Dairy Feed (ingredients and products for young animal nutrition);
DMV Fonterra Excipients (a 50 per cent joint venture with Fonterra in pharmaceutical excipients).

Expected value

Based on 2007 figures, FrieslandCampina looks to have an annual revenue of €9.1bn, and the 17.000 member dairy farmers will deliver 8.3bn kg of milk between them.

The head office of FrieslandCampina will be in Amersfoort, The Netherlands.