(Agence Ecofin) – The global dairy sector remains dominated by 20 large companies. In this competitive context, acquisitions or mergers are strategic maneuvers for certain players in order to strengthen their positions and gain synergies.
The Dutch dairy group FrieslandCampina and the Belgian Milcobel will merge to create a new entity. The approach received the agreement in principle from the boards of directors of cooperatives and company management, according to a joint press release published on December 18.
Although no financial details of the operation have yet been revealed, the two partners have already indicated that the new company should have a cumulative turnover of 14 billion euros ($14.5 billion) with a presence in 30 countries for more than 22,000 jobs. The entity will also process 10 million tonnes of raw milk and will have 11,000 dairy farms spread across the Netherlands, Belgium, Germany and northern France.
« The merger of FrieslandCampina and Milcobel is more than the sum of its parts. It creates a common dairy cooperative that is forward-looking, resilient and able to seize opportunities in a dynamic global dairy market. This project will only strengthen our attractiveness to member dairy producers, commercial partners and our collaborators.» said Sybren Attema, Chairman of the Board of Directors of FrieslandCampina.
According to the two partners, a merger proposal will be developed during the first half of 2025 and discussed between the members of FrieslandCampina and the shareholders of Milcobel and then submitted for their approval before reaching the competition authorities for a green light.
Although the name of the new entity has not yet been revealed, observers emphasize that this is not the wedding of the century in the global dairy industry. FrieslandCampina is certainly a giant with 13 billion euros in turnover in 2023, but the Belgian remains a small thing with only 1.4 billion euros generated during the same year.
In such a context, the scope of such a merger should first be limited to the old continent with the good complementarity of product portfolios and operating methods. The two companies operate as cooperatives in which the dairy farmers are also shareholders in addition to supplying milk for industrial processing.
For the rest, the new entity, if it does not shake up the global market, should still be part of the top 10 largest dairy companies.
According to the latest Rabobank ranking published last August, the French group Lactalis remains in first place followed by the American dairy cooperative Dairy Farmers of America (DFA), Nestlé, Danone and the Chinese company Yili.
Espoir Olodo
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