Danish Crown, Tican Merger Called Off
DENMARK - After an intense seven-month review by the authorities, the Board of Directors of Danish Crown has had to accept that it has not been possible for the merger of Danish Crown and Tican to be approved by the Danish competition authorities within the stipulated deadline.
2 November 2015
3 minute read
By: This means that the merger application lapses.
"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," says Kjeld Johannesen, President and Group CEO of Danish Crown.
The commitments proposed by Danish Crown involve both the divestment of production facilities and the sale of volumes of Danish raw materials in excess of Tican’s and Danish Crown’s combined sales in Denmark today at a price which does not even cover the level of costs, but these commitments have been deemed insufficient.
"It has been clear from the outset that a merger between the two companies would be driven to a large extent by a wish to secure the supply of slaughter animals in Denmark – and to a lesser extent by our business plans. However, the costs should, of course, not exceed the potential synergies identified during our consideration of the possible merger," says Erik Bredholt, Chairman of the Board of Directors of Danish Crown.
Today, Danish retailers sell meat products from many different parts of the world. Increasing volumes of foreign meat are being consumed by Danes every year, and today account for more than 20 per cent of total sales by Danish retailers.
An analysis by a European economist concludes that the market for pork is already characterised by international competition, also in Denmark. However, the Danish competition authorities see things differently.
"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," says Kjeld Johannesen.
"I find it really hard to see how this outcome will ensure greater competition in the marketplace. What is certain is that it will prevent the development of Danish trade and industry."
