Press release: Campina and Arla intend to merge

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08 December 2004
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The merger will create world’s largest farmer-owned dairy company with strong leading brands in consumer and business-to-business markets

The dairy companies Campina, the Netherlands, and Arla Foods, Denmark, intend to merge, forming a new company to be called Campina Arla.

Following the merger, Campina and Arla Foods will create world’s largest farmer-owned dairy company with turnover of approximately EUR 10 billion, a work force of around 28,000 employees and about 21,000 member-farmers, the owners of this co-operative company.

Campina Arla will be headquartered in Copenhagen, Denmark (main office) and Zaltbommel, the Netherlands. Four groups will take charge of the commercial activities of Campina Arla: Consumer Products Nordic, Consumer Products Europe, Cheese & Butter, and Ingredients.

Mr. K.E. (Knud Erik) Jensen (62, Danish nationality), currently Chairman of the Supervisory Board of Arla Foods, will be appointed Chairman of the Supervisory Board of Campina Arla, with Mr. J.J.G.M. (Justinus) Sanders (48, Dutch nationality), currently Chairman of the Executive Board of Campina, as CEO of Campina Arla. Mr. Å. (Åke) Modig (59, Swedish nationality), chairman of Arla Foods, will be appointed Vice CEO of Campina Arla. Mr. C.H. (Kees) Wantenaar (55, Dutch nationality), at present Chairman of Campina, will become Vice Chairman of the new Supervisory Board.

Yesterday the Supervisory Boards of both companies informed the General Assemblies of their companies, the Campina Members’ Council and Arla Foods’ Board of Representatives. Both General Assemblies, which represent the 21,000 member-farmers, will decide on the merger in the Spring of 2005.

Significant business benefits
The merger will create significant business benefits. First of all, in the area of cost synergies the tie-up will increase the procurement scale and improve effectiveness of production as well as decrease administrative costs. The new company also further enhances the critical mass in skills and assets. Campina Arla will increase the effectiveness of the company’s R&D budget, empower its financial strength and thus create a sound basis for further expansion in markets which contribute to the company’s main mission: adding value to the members’ milk. This combined power will ensure that the world’s largest farmer-owned dairy company (worldwide, the second-largest dairy company) will pay its member-farmers a milk price that is among the most competitive in the EU.

The new company’s key strategic principles, product categories and markets still have to be worked out in detail. But basically they will be based on the core activities of both partners: consumer products and ingredients. The merger will combine the best of these two leading dairy companies, creating the perfect synergy thanks to their complementary fit.

A perfect fit
Campina and Arla Foods are among the top dairy companies in Europe in terms of performance, entrepreneurial skill, co-operative tradition, innovative power and marketing strength. They focus on similar product categories but have achieved market positions in complementary markets.

In liquid milk, yoghurts and desserts Arla Foods focuses on Scandinavia and the UK, while Campina focuses on the Benelux countries, Germany, Greece, and Russia. In cheese and butter, Scandinavia and the UK are home markets for Arla Foods, with Campina’s home markets in the Benelux and Germany. In drinks, desserts and creams as well as cheese and butter, both partners are performing excellently outside Europe and intend to grow in these markets. And both companies are powerful players in dairy-based ingredients for the food and pharmaceutical industries.

Campina Arla will consolidate the two companies’ strong positions in Europe through driving innovation and will create a joint position in dairy markets of the Middle East as well as Asia. In addition, it will further expand its strong position as an innovative supplier of ingredients for food and pharmaceutical industries throughout the world.

Management of the new company
The new company will continue to be owned and controlled by its member-farmers, as is currently the case at Campina and Arla Foods. The milk payments to the farmers will remain directly linked to its revenues. Campina Arla will combine control by the farmers with the professionalism of executive and senior management and skilled and motivated employees at all levels and disciplines.

Mr. J.J.G.M. (Justinus) Sanders (48, Dutch nationality), currently Chairman of the Executive Board of Campina, will be appointed CEO of Campina Arla. Mr. A. (Åke) Modig (59, Swedish nationality), chairman of Arla Foods, will be appointed Vice CEO of Campina Arla. Mr. S. (Simon) Quist (58, Dutch nationality), presently Campina’s CFO, will become CFO of the new company. The other members of the Executive Board of Campina Arla will be Mr. B.C. (Bert) Jansen (45, Dutch nationality), Mr. P. (Povl) Krogsgaard (54, Danish nationality), Mr. A. (Andreas) Lundby (54, Danish nationality) and Mr. P. (Peder) Tuborgh (41, Danish nationality). Mr. K.E. (Knud Erik) Jensen, currently Chairman of Arla Foods, will be appointed Chairman of the Supervisory Board of Campina Arla. Mr. C.H. (Kees) Wantenaar, at present Chairman of Campina, will become Vice Chairman.

For an interim period the Supervisory Board will consist of all present Supervisory Board members of both companies on the basis of equal voting rights. An integration committee – with five members from each Supervisory Board – will oversee the steps necessary to build a single company. A harmonisation committee – with five representatives from each co-operative company – will study the best possible way to integrate the two co-operatives. Campina Arla’s General Assembly will consist of 217 member-farmers, with 140 from Arla Foods and 77 from of Campina.

Power of synergy
“This merger will unite the best of both companies and is a crystal clear example of the power of synergy”, said Justinus Sanders, the new CEO of Campina Arla. “With Campina Arla, we will establish a dairy co-operative with even more competitive and innovative power for the benefit of our member-farmers, customers, consumers and our employees. By joining forces the company will become an even more attractive business partner for international retailers, and the new company will establish a sound basis in a dairy world that is feeling the pressure from new EC policies. Capitalising on complementary strengths Campina Arla will clearly establish itself as one of the dairy industry’s top global players. But we will maintain the local focus currently held by both partners – in terms of social responsibility and product ranges that suit the national traditions and preferences in individual countries. In short: we will think global and act local.”

Knud Erik Jensen, the new Chairman of Campina Arla added: “Campina and Arla Foods are among the top performing dairy companies in Europe. In terms of markets and product portfolios, the companies match and complete one another. We’ve said that growth is not the answer in itself but a solution to secure our business in an aggressive competitive climate. I am very pleased that our two boards have now agreed to the proposed merger. I believe that a merger is the best answer to our aim of stabilising our milk prices in the future. The two companies’ member-farmers have been through a cross-boarder merger before. We find that dairy farmers speak the same language, no matter where they are.”

Trade unions, works councils, and regulatory authorities have been informed about the planned merger, and will be involved in the process where applicable.

Campina is an international co-operative engaged in the development, production, sale and distribution of dairy and dairy-based consumer products and high-grade ingredients for the food and pharmaceutical industries.

Campina employs around 6,900 people and generates annual turnover of approximately € 3.7 billion. The company occupies top positions in the markets in which it operates with such consumer brands as Campina, Landliebe and Mona. In addition, Campina operates worldwide with its Industrial Products Group.
This ingredients group, including the DMV International Division, is a successful partner for the food and pharmaceutical industry.

Arla Foods provides modern consumers with milk-based products that provide inspiration and create confidence and well being.

The Group’s products are sold in countries worldwide and are developed and adapted to consumers’ wishes and requirements in individual markets.

As Europe’s largest dairy company, Arla Foods is well positioned to do so. During the 2003/04 financial year, the Group will receive 8.6 billion kg milk and have a turnover of approx. DKK 48 billion.

These figures include the UK dairy company, Express Dairies, which merged with Arla Foods’ British subsidiary, Arla Foods plc, in October 2003. Following the merger, the UK is now Arla’s largest market accounting for 32% of the Group’s turnover. Sweden and Denmark follow with 21% and 20% respectively. Approx. 13% of the turnover originates from the other European markets with the rest from outside Europe.

Arla Foods is a co-operative owned by approx. 12,700 milk producers in Denmark and Sweden.

For more information:
Campina Corporate Communication
T 31 (0) 418 571316

Arla Foods Corporate Communication
T 45 89 381009

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Arla Foods is an international dairy company owned by 9,700 farmers from Denmark, Sweden, the UK, Germany, Belgium, Luxembourg and the Netherlands. Arla Foods is one of the leading players in the international dairy arena with well-known brands like Arla®, Lurpak®, Puck® and Castello®. Arla Foods is focused on providing good dairy nourishment from sustainable farming and operations and is also the world's largest manufacturer of organic dairy products.

Press contact

Arla Group Press Office
Arla Group Press Office (journalists/media only) +4591310310
Åse Andersson
Åse Andersson Head of Media Press contact for Arla Foods in Denmark +45 91 310 310 +45 89 38 10 00
Carina Østergaard
Carina Østergaard Corporate Communication Manager Press contact for Arla Foods International +45 91 31 16 01 +45 89 38 10 00