Dairy cooperatives FrieslandCampina and Milcobel want to merge. The aim of this drastic step is to better respond to the challenges and opportunities in the market, in which the milk supply is decreasing.
According to the company, the merger of FrieslandCampina and Milcobel will create one international and future-oriented organization that can better utilize opportunities and tackle challenges more effectively in the global dairy market.
"The merger of FrieslandCampina and Milcobel is more than the sum of its parts. It creates one future-oriented, joint dairy cooperative that is resilient and can seize opportunities in the dynamic, global dairy market," says cooperative chairman Sybren Attema of FrieslandCampina. According to his Belgian counterpart of Milcobel, the deep-rooted cooperative philosophy forms the basis of the merger.
After the merger, the new organization will have a pro forma turnover of more than €14 billion and will have almost 22.000 employees worldwide. The milk volume amounts to approximately 10 billion kilos of member milk (9 billion FrieslandCampina, 900 million Milcobel). This milk is supplied by almost 11.000 member dairy farms owned by approximately 16.000 member dairy farmers in the Netherlands, Belgium, Germany and Northern France.
Although it seems logical that a merger would also require restructuring and cuts in processing capacity, the CEOs of FrieslandCampina and Milcobel that major costs will have to be incurred. "This business case is not built on closing locations," says CEO Jan Derck van Karnebeek of FrieslandCampina. The hope is that the new merger company, which will probably not be able to start until early 2026, will attract new dairy farmers in the coming period, says Milcobel CEO Peter Grugeon.
For this, the focus is on Northern France. In Belgium, too, the milk pool is shrinking, and just like in the Netherlands, there are more companies looking for milk. Even Danone, which has a history of divesting dairy farmers, is looking for new dairy farmers in Belgium.
In the coming months, the member councils of FrieslandCampina and Milcobel must decide on the proposed merger. Financial details must also be worked out regarding the inclusion of the Milcobel members in the cooperative system of FrieslandCampina. For example, the Milcobel shares must be converted into delivery certificates and it must become clear under which precise conditions the exchange can take place.
In terms of milk money, the members of Milcobel definitely seem to be making progress, because FrieslandCampina pays a higher milk price. The Milcobel members are given 2 years to switch to FrieslandCampina's Foqus Planet quality system.
In the course of next year, the competition authorities will also have to make a decision on the merger. Van Karnebeek does not expect any major bumps, but indicates that Milcobel's position on the Belgian cheese market may still give rise to discussion.
The proposed merger has been an option for some time, according to chairmen Betty Eeckhout and Sybren Attema of both cooperatives. Eeckhout did not deny that talks were held with more parties, but according to her, the conversation between the two has only really gained momentum in the last 6 to 8 weeks. "The cooperative DNA and the corporate culture" of both parties ensured the definitive click.
Read here more in an analysis based on five conclusions about the announced merger.
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