Arla voices concern over Campina merger
have voiced concerns over a financial technicality which could
throw its approaching merger with Campina into disarray, Tom
Armitage reports.
According to a report appearing in Danish newspaper Jyllands-Posten last week, Arla's committee members have raised concerns regarding the accountability of a portion of Campina's net capital - something which they claim leaves the organisation's DKK1.13 billion (€152 million) shareholder funds at risk.
Conversely, Netherlands-based Campina contends that this figure should be excluded from its net capital as it consists of so-called "membership certificates", which it says do not hold any real financial value.
At present Campina's organisational structure demands that prospective member-farmers must first buy membership certificates before they can supply it with milk, which Campina then refunds should they decide to leave.
In return for a one-off certification payment, Campina guarantees its 7,000 member-farmers that it will buy a specified quota of their raw milk, in addition to giving them a say in the election of committee members and representatives on its influential policy-making members' council.
In a bid to smooth-out any discrepancies between the two groups, however, Arla's deputy chairman, Aake Hantoft, has hinted that Arla Foods' management may seek to change the co-operative's own capital structure by introducing a similar membership system across its organisation.
A phone poll conducted by Jyllands-Posten involving 133 of Arla's current 150 committee members, found that 67 are in favour of the proposed merger, 64 still hold reservations, 2 will definitely vote against, while the remaining 17 were not immediately available for comment.
Current regulations stipulate that 133 of Arla's committee members must vote in favour of the proposed merger on 6 April in order for the deal to be formally approved.
As reported by DairyReporter.com in December last year, the proposed merger will create a company with sales of more than €10 billion, which will also control an estimated 13 per cent of the EU milk market and rank as the world's second largest dairy group, behind Swiss food giant Nestlé.
The merged companies, which will operate under the new trading name Campina Arla, have already outlined their common objective to strengthen sales of their branded, consumer dairy products - although the deal is still subject to regulatory approval from the European Commission (EC).
