Campina, Arla announce merger vote setback

Related tags Campina Denmark Milk

Campina, the Dutch dairy co-operative, yesterday informed its
member-farmers that the date of a crucial vote determining whether
it will merge with Arla Foods has been pushed back, to allow both
groups more time to reconsider "unresolved issues", Tom
Armitage reports.

Both Campina and Arla's respective boards of representatives were due to vote on the merger proposal on 6 April next month, with unanimous approval required from both groups in order for it to proceed.

But now this looks set to be pushed back to the end of the month, after Arla's members raised concerns regarding the accountability of a portion of Campina's net capital - more specifically, its current membership system​.

Arla's dominant position in the Danish dairy market means that it is unable to charge an entry fee to potential members (in accordance with Danish competition regulations) and furthermore, it has no necessity for such a system.

Conversely, Campina charges its 7,000 member-farmers an undisclosed fee for each 105kg of milk that they supply the dairy co-operative with in order for them to acquire so-called Membership Participation Units (MPUs).

In return for these one-off certification payments, Campina guarantees that it will buy a specified quota of its member-farmers raw milk, in addition to giving them a say in the election of committee members and representatives on its influential policy-making members' council.

Arla told​ that although it was willing to adopt a similar membership system to Campina, after several months of negotiations, it could indeed take several months to implement.

"Even if our members approve a change in the membership system, it could take many years for the Danish authorities to follow suit,"​ a spokesperson for Arla commented.

Both companies said that they did not anticipate any further setbacks and that April would witness the formation of the world's largest dairy co-operative.

"Although this issue is complicated, we have 100 per cent confidence that the merger will proceed as expected,"​ a Campina spokesperson commented.

"We had a tight timetable for the merger process. We cannot, however, provide the necessary clarification within the original time schedule. For such important matters we need time to have all unresolved issues addressed before we present the merger proposal to the Boards of Representatives,"​ Arla's chairman Knud Erik Jensen said in a statement yesterday.

His opposite number at Campina, Kees Wantenaar, commented: "We're in the middle of a merger process that will create a new dairy co-operative, and a process like that demands maximum care"​.

"We set ourselves an exceptionally tight schedule and we're now allowing ourselves a little more time,"​ he added.

The proposed merger will create a company with sales of more than €10 billion, which will also control an estimated 13 per cent of the EU milk market and rank as the world's second largest dairy group, behind Swiss food giant Nestlé.

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