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December 17, 2008

UPDATE 2: NETHERLANDS: Farmers vote yes to FrieslandCampina

The merger of Dutch dairy firms Friesland Foods and Campina was sealed this afternoon (17 December) after the members of both co-operatives voted in favour of the deal.

The merger of Dutch dairy firms Friesland Foods and Campina was sealed this afternoon after the members of both co-operatives voted in favour of the deal.

Farmer-members on both sides gave the all-clear to the merger, which will create FrieslandCampina, a dairy giant generating around EUR9.1bn (US$13.08bn) in sales a year.

Friesland Campina chairman-designate Kees Wantenaar said economic conditions and the liberalisation of the dairy sector make a merger more necessary than it did a year ago, when the two sides first agreed to a merger.

“When the merger was announced a year ago, we were going through times of unprecedented high prices in the dairy sector. The situation on the global dairy market has changed drastically since then. When we started with the merger in 2007, there was no sign of a financial crisis, let alone a recession,” Wantenaar said.

“The new company will start in a challenging market and will have to prove itself in these testing conditions. FrieslandCampina has scale in research, production and marketing, local market knowledge, entrepreneurship and highly skilled and motivated staff. The past period has demonstrated this. Teams have worked very hard and very well together to prepare the merger. People have literally been working day and night. It was a really inspiring experience.”

Earlier today, and after months of scrutiny, the EU approved the merger on the condition that FrieslandCampina sell off a clutch of businesses.

Friesland will offload its fresh dairy business in Nijkerk. Campina will sell a cheese production plant in Bleskensgraff in the Netherlands and long-life dairy drink brands Yogho Yogho and Choco Choco in the Netherlands and Belgium.

Friesland and Campina said the businesses to be sold account for combined sales of EUR367m – or 4% of the merged company’s turnover.

The two dairy processors also offered to ensure access to raw milk in the Netherlands.

Under these plans, Friesland and Campina said the businesses up for sale would be able to source raw milk from the merged company under a transitional supply deal.

Subsequently, the Commission said, a “Dutch Milk Fund” would be set up to ensure access to a maximum of 1.2bn kg of raw milk a year. The fund, the Commission said, would remain in place “until more structural changes in the market for raw milk were achieved”.

The Commission added that Friesland and Campina had agreed to reduce the “exit barriers” for farmers wishing to leave the merged co-operative.

FrieslandCampina will comprise four divisions – consumer products western Europe; consumer products international; cheese and butter; and ingredients.

The business will employ 22,000 people and have 100 production and sales locations on 24 countries.

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