Members of Friesland Foods and Campina Agree to Merger

08/05/08 The General Meeting of member dairy farmers of Friesland Foods and the Members’ Council of Campina today (7 May) approved the proposal to merge the two dairy co-operatives and companies. The merger agreement will be signed tomorrow (8 May) by their respective Boards of Management and Co-operative Boards. The approval of the member dairy farmers is a major step forward in the merger process. It will be followed by an advice of the works councils of the two companies and a decision by the European Commission. The Commission’s response is expected in the final quarter of 2008.

An overwhelming majority of the General Meeting of member dairy farmers of Friesland Foods voted in favour of the merger. The Members’ Council of Campina accepted the proposal unanimously. A two-thirds majority in favour of the proposal was needed from both co-operatives for the merger to go ahead.

In April, the Executive Boards and Supervisory Boards/Co-operative Boards of Friesland Foods and Campina adopted a merger agreement which will lead to the creation of a new dairy company and dairy co-operative, both called FrieslandCampina. In recent weeks, the proposal has been discussed with the member dairy farmers of the two co-operatives in more than a hundred meetings. The overall consensus was that the merger was an excellent initiative. The members supported the view that the new company would be better able to respond to developments in the dairy market and thus create more value for the member dairy farmers than if the two companies were to continue as separate entities.

The chairmen of both co-operatives express satisfaction with the members’ decision. Kees Wantenaar, Chairman of the Board of Campina and Chairman-designate of the Board of the new dairy co-operative, issues the following statement: “I am proud that the member dairy farmers of Friesland Foods and Campina in the Netherlands, Germany and Belgium recognise the benefits of the merger for their own dairy farms. Dairy farmers are increasingly dependent on global developments in the dairy industry. In a dynamic and competitive dairy market, they need a strong dairy co-operative. FrieslandCampina will fulfill that role, with its broad product range, its presence in many regions and its capacity to be distinctive and achieve further growth. This will need to translate into a trend-setting milk price for the members. Such a strategy and level of ambition clearly appeals to our members.”

Sybren Attema, Chairman of the Supervisory Board of Friesland Foods, says: “I am confident that we will create an excellent combination. That applies to the co-operative and the company alike. We must use our strong brands and innovative strength to deliver a good performance for our members. And by operating efficiently, we can achieve cost benefits. I have every confidence in the course we are setting ourselves.”

Theo Spierings, member of the Board of Management of Friesland Foods, says he is pleased with what has been achieved in recent months: “We are creating a company with enormous potential in terms of manpower, markets and brands. FrieslandCampina will be very special in that it will be a multinational which is owned by the member dairy farmers themselves. Together, we have compiled a robust strategy that will anticipate and respond to current and future market developments. It’s a strategy that will optimally convert the milk our members produce into value for consumers, customers and employees, and hence for our member dairy farmers. The merger we are embarking on will inevitably affect some of our staff, but we will handle these developments in a responsible way.”

Kees Gielen, Acting CEO of Campina, says: “Following the approval of our member dairy farmers and in anticipation of a decision by the European Commission, selected teams can now get to work on fully merging the two companies and preparing the launch of the new multinational. If everything goes to plan, FrieslandCampina can become fully operational by the end of the year. Until then, however, it will be business as usual. Friesland Foods and Campina will continue to function as two wholly separate, autonomous companies. As soon as we get a decision from the European Commission, we’ll be energetically starting out as a new, single company.”

The European Commission still has to make a pronouncement on the merger, and is expected to issue its response in the final quarter of 2008. Only then will the two companies and co-operatives be able to formally merge. Until then, Friesland Foods and Campina will continue to operate as wholly independent entities.

The new FrieslandCampina company will consist of four business groups: Consumer Products Western Europe, Consumer Products International, Cheese & Butter and Ingredients. The full product range will include liquid milk, milk powders and concentrates, dairy drinks, yoghurts, desserts, cream, coffee creamers, baby and infant food, cheese, butter and ingredients. The annual turnover of FrieslandCampina is projected at EUR 9.1 billion, based on the 2007 figures. The new company’s 17,000 member farmers will together supply 8.3 billion kilos of milk. FrieslandCampina will employ 22,000 staff and operate more than 100 production facilities and sales outlets worldwide. Cees ’t Hart, formerly employed by Unilever, is envisaged to become Chief Executive Officer of the new company. The head office will be at Amersfoort, the Netherlands.