With a proposed merger between Denmark pork cooperatives Danish Crown and Tican off of the table, German food company Tönnies is now pursuing a merger agreement with Tican, the companies announced on November 2.
Tican has signed a framework agreement on the transfer of shares in Tican A/S with Tönnies, according to a press release issued by Tican. Tican A/S is the holding company for all of Tican’s pig slaughtering and meat processing. Tican’s sales companies in Germany and China are also covered by the agreement.
A due diligence review will take place in November, and a share transfer agreement between the parties is expected by the end of November.
According to Tican, the transaction is expected to be approved by the European competition authorities; however it is expected that this approval will take place within approximately one month from the notification – around the end of 2015.
If the agreement is approved, the financial interest of the cooperative members for a competitive residual payment for the 2014-15 financial year will be secured. The agreement with Tönnies also provides Tican confidence that the future settlement price of finishers and sows will be at a competitive level. It has also been of crucial importance for the board and management to ensure the future operation and development of Tican's companies.
Danish Crown disappointed Tican deal not approved
Prior to the announcement of the Tican-Tönnies merger, Danish Crown had been planning a merger with Tican, with the owners for both cooperatives approving the merger in March. Among Tican’s owners, 91 percent approved the deal and 100 percent of Danish Crown’s owners giving their approval. However, Danish competition authorities did not approve the pending merger before its stipulated deadline of October 31.
“We have declared our willingness to undertake a large number of commitments to the Danish Competition Authority, and even though we have consulted with the authority on what it would take for the merger to go through, the commitments that we have been ready to undertake have not satisfied the authority’s requirements,” Kjeld Johannesen, president and group CEO of Danish Crown, said in a statement.
“It is, of course, a great shame, and we have to admit that we were surprised by the very national perspective adopted by the Danish Competition Authority in its review, given that the merger would be one of two export businesses. It’s hard to see how a European single market can develop if all the national competition authorities maintain a local perspective.”