Aarhus, still on the market

- Last updated on GMT

Related tags: Raw material prices, Trans fat, Aarhus

Danish fats firm still on the market as majority stakeholder waits
for a sale.

The news comes despite an announcement last year, from United International Enterprises Limited (UIE), that it would divest its 45.6 per cent chunk of cocoa butter replacer Aarhus by January 2005.

Last year, the firm cited a potential difference in long-term investment interests for the sell-off, claiming a new partner might better serve Aarhus.

But UIE is "still in negotiations", a spokesperson at Aarhus told FoodNavigator.com, evading the question of whether this involved one, or several, companies.

The Aarhus representative claimed that despite negotiations, it was still "business as usual" at the firm.

In addition to UIE, a pension fund owns over 10 per cent of Aarhus, and a further fund has 5 per cent, while private investors make up the remaining approximate 40 per cent.

Industry rumours had previously hinted that Swedish fats firm Karlshmans could be interested in picking up the UIE slice. But competition continues to bite for the firm, that announced in December it would pour €6.68 million (SEK60m) into cost-cutting measures. A move that followed swiftly on from some 50 job cuts in October.

It is also possible that US ingredients giants ADM or Cargill - currently driving deeper into their European market - might be interested in buying the shares in Aarhus United.

In early 2004 results at Aarhus were hit by a cut in demand from the food industry for bulk oils, declining exchange rates that shaved margins and higher raw material prices.

But the firm has seen been more upbeat, claiming that revenue is expected to be 'marginally higher in 2004 than the DKK4.5 billion in 2003' based on unchanged raw material prices and higher sales volumes.

The growing popularity of palm oil is contributing to a lift in sales. Palm oil is becoming increasingly important as an ingredient in a wide range of foods, not least because it is free of artery-clogging trans fats, formed when fats are hydrogenated to make them more solid and extend their shelf life. Because palm oil is semi-solid naturally, it does not require hydrogenation.

The oils also continues to benefit from a growing awareness of the health properties of the antioxidant-rich oil.

Palm oil is now second only to soybean oil in terms of global demand, accounting for 28 per cent of total edible oil sales.

Related topics: Market Trends, Fats & oils

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