Dutch dairy giants agree on merger plan
yesterday reached an agreement to combine their operations in a bid
to maximize returns from their milk supply.
The dairy market is presently facing a number of issues that are affecting market conditions. These include re-regulation markets by the EU and the World Trade Organisation, and a global market for dairy products that can fluctuate wildly. The merged company is expected to be in a better position to deal with these challenges in the long-term, generating an estimated €175m reduction in outgoings by 2012, despite the initial cost output and operational reorganization required for the merger. Over the next three years, both companies are expected to cut as many as 500 jobs in its operations, as part of moves they claim are vital to streamlining office requirements, particularly at their respective headquarters. FrieslandCampina If approved by both companies' members the next month, the agreement will result in the formation of FrieslandCampina, a new global dairy processor and cooperative, which will supply products and ingredients like milk powders, yoghurts and cheeses. As parts of its restructure, the processing arm of the business will be split into four separate groups, according to both companies. These include Consumer products Western Europe Consumer products international Cheese & Butter Ingredients In terms of the ingredient supply chain, both Friesland Foods and Campina said that they expected the merger will create a stronger income for member farmers to ensure supply sustainability.