Arla Food Ingredients and DMV will not merge, talks collapse

- Last updated on GMT

Related tags: Milk

Talks collapse over a merger between the mothers of Arla Food
Ingredients and DMV International after negotiations between
Campina and Arla Foods fail to reach a 'satisfactory
result','writes Lindsey Partos.

Combined the two leading European dairy co-operatives would have had 27,000 employees, and annual revenue of €10bn.

Due to confidentiality agreements both dairy firms were unable to provide precise details as to the breakdown, but it is believed they failed to agree over financial terms.

"We have enormous respect for Campina and regret that we could not reach a satisfactory result this time around,"​ said today Arla Foods' chairman Knud Erik Jensen.

That the co-operatives have abandoned talks is not a total surprise. Earlier this month Dutch firm Campina informed its member-farmers that the date of a crucial vote determining whether it would merge with Arla Foods had been pushed back, to allow both groups more time to reconsider "unresolved issues."

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 Arla's members raised concerns regarding the accountability of a portion of Campina's net capital - more specifically, its current membership system.

Set against the backdrop of slashed milk prices and reduced subsidies from Brussels, the move to merge was seen as a positive move for both firms, creating the world's second largest dairy company behind Swiss giant Nestle.

At €6.2 billion in dairy turnover for 2003 Arla Foods, against Campina's €3.7 billion, would have contributed the largest chunk to the merger.

The ingredients division consolidated through DMV and Arla Food Ingredients would have contribute about a tenth of this figure, some €1.38 billion, rolling over 665 000 tonnes of ingredients.

Arla Food ingredients is enjoying growing attention for its low calorie sweetener tagatose: not yet approved on EU markets the sweetener is used in a growing number of food formulations in the US, as food makers develop their product lines to feed the increasingly health-conscious consumer.

Among DMV's range, that contributed €500m to Campina's €3.7 billion turnover, is its natural milk protein lactoferrin product, a leading player in the burgeoning value-added whey fractions market currently enjoying strong growth, in some parts of the world hitting 20 per cent per year.

Related topics: Market Trends

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