After an intense seven-month review by the authorities, the board of directors of Danish Crown says it 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. This means that the merger application has lapsed.

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Danish Crown bosses fear the merger failure will prevent the development of Danish trade and industry.

In the meantime Tican a.m.b.a. has signed a framework agreement on the transfer of shares in Tican A/S with the German food company Tönnies.

Commenting on the failure of the proposed merger, Kjeld Johannesen, president and group CEO of Danish Crown said: “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.”

The commitments proposed by Danish Crown involved 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 did not even cover the level of costs, but these commitments have been deemed insufficient.

Erik Bredholt, chairman of the board of directors of Danish Crown, added: “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.”

Disappointment

Kjeld Johannesen, added: “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.

“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.”

Tican and Tönnies to merge

The Tican and Tönnies agreement has been put in place after the merger agreement with Danish Crown fell through.

Tican A/S is the holding company for all of Tican’s activities within pig slaughtering and meat processing with the companies Tican Fresh Meat A/S, Direct Table Foods Ltd., Pro-Pak Foods Ltd., Tican UK, Tican Chilled and Nove Sp.zo.o. The sales companies in Germany and China are also covered by the agreement.

According to the agreement a due diligence review will take place during November. A share transfer agreement between the parties is expected at the end of this month and the transaction looks set to be approved by the European competition authorities around the end of the year.

This story was originally published on a previous version of the Meat Management website and so there may be some missing images and formatting issues.