Friesland and Campina agree on merger

Friesland Foods and Campina, the Netherlands’ two largest dairy groups, have reached agreement on the merger agreement that will create a new dairy company and cooperative, called FrieslandCampina.

It will rank either third or fourth in the world by dairy sales after Switzerland’s Nestle and France’s Danone, according to a Friesland spokesman.

The proposal for the merger agreement will be discussed with the member farmers of both cooperatives over the next few weeks at regional meetings before a decision will be made on 7 May 2008 by the member farmers during a general meeting of member dairy farmers of Friesland Foods and a members’ council of Campina.

FrieslandCampina will structure its product groups and regions into four business groups: Consumer Products Western Europe, Consumer Products International, Cheese & Butter and Ingredients. Based on the combined figures for 2007, FrieslandCampina has an annual turnover of €9.1 billion, making FrieslandCampina among the leading players in the global dairy market. Together, the 17,000 member dairy farms supplied 8.3 billion kg of milk in 2007. The new company will employ 22,000 people and have more than 100 production and sales organisations around the world.
Because offices will be merged and relocated, at least 500 of the total 22,000 jobs of the merged company will be lost in phases until 1 January 2011.

After 7 May 2008, the relevant competition authorities, including the European Commission, have to give their approval. The decision by the European Commission is expected to be announced in the fourth quarter of 2008.

The merger comes as functional dairy food brands such as Optimel, Optiwell, Milner and Vifit have had a positive impact on 2007 growth of Campina, according to annual returns. Total turnover for the year rose by 11% to €4 billion, with 48% coming from main brands.