Royal Cosun to Acquire CSM's Sugar Division

Partly as a result of the reform of the European sugar market organisation, cost price has become a crucial factor in the European sugar market. By combining resources a further reduction of the cost price can be achieved.

21/07/06 CSM is set to sell its sugar division to fellow Dutch sugar supplier Royal Cosun. Cosun said that the sugar producers Suiker Unie and CSM Suiker have a market share of about five percent in Europe, and complement each other very well. It noted that synergy effects can be achieved primarily in the fields of organisation, production and logistics. On the European level the merged company will be able to play a more prominent role. Last but not least, the acquisition fits in with the company's aim to retain a sustainable and profitable beet cultivation and sugar industry in the Netherlands. The selling price will be determined on the basis of the balance sheet as at 30 September 2006.

The European sugar market is regulated to a large extent by the European Sugar Regulation. The current regulation runs till July 2006 and will be replaced by a new sugar regime that will run until 2014/2015. Partly as a result of the reform of the European sugar market organisation, cost price has become a crucial factor in the European sugar market. By combining resources a further reduction of the cost price can be achieved.

With an annual turnover of around euro 250 million, CSM said that its sugar division is a highly efficient sugar and sugar specialties company. It produces and sells approximately 350,000-380,000 tons of sugar each year. The company employs around 300 permanent staff, is headquartered in Diemen, the Netherlands, and has two production facilities: Vierverlaten (Hoogkerk, Groningen province), which produces sugar from beet. This facility processes 18,500 tons of beets per day. Breda, which produces sugar specialties (syrup, soft brown sugar, liquid sugar etc.) and accommodates the laboratory.

Cosun said that regarding the consequences of the planned takeover, it is clear that the beet processing capacity of the three sugar refineries (Groningen, Hoogkerk and Dinteloord) is needed. No closures of these production facilities are to be expected as a consequence of this transaction. No further information was provided on how the other activities of CSM Suiker and Suiker Unie will be merged.

Gerard Hoetmer, CEO at CSM said, “The merger between CSM Sugar and Cosun represents a major joining of forces and a reinforcement of the entire chain. It secures the continuity of the Dutch sugar sector in the rapidly changing European sugar market, also in the longer term.” CSM announced that it would start an investigation into the possibilities of selling its Sugar Division on the 16th of February.