Sos Cuetara and Koipe form Spain's third largest food group

The management of Spain's Sos Cuetara and Koipe food groups met on Wednesday to give their approval to the merger of the two companies - a deal which will create the third-largest food producer in Spain behind Ebro Puleva and Campofrio.

The merger deal, which will take the form of a complete takeover of Koipe by Sos Cuetara, has been some months in the making, with Sos Cuetara's president Jesus Salazar forced to negotiate at length with the four regional savings banks which own 18 per cent of Koipe.

The lengthy negotiations centred on the final rate of exchange between Koipe and Sos Cuetara shareholders, and subsequently on the eventual gains or losses the four banks would register. In the end, it was agreed that 41 shares in Sos Cuetara would be issued for every 20 shares in Koipe - leaving the four banks with 23 per cent of the new company and making them the second-largest shareholders.

Sos Cuetara acquired 75.9 per cent of Koipe last year from the Italian group Montedison at a cost of some €415 million, and has been planning the merger ever since. Only with a sufficiently large critical mass would the company be able to compete with foreign competitors, the companies argued, and that critical mass would only be achievable through the merger.

Sos Cuetara was itself created in 2000 via the merger of rice group Sos Arana with biscuit maker Cuetara. Koipe is best known for its olive and other vegetable oils, sold under the brands Koipe, Carbonell and Elosua.