Cosun gets green-light for CSM Suiker acquisition
acquisition of CSM Suiker, news that is welcomed not only by the
companies but also by sugar-beet growers.
CSM announced that it was planning to sell its sugar business in February 2006, as it was felt the division could not compete in the industry once EU sugar regulations came into force.
The sale, said to be in the region of €202m, was expected to be completed in Q4.
Cosun said that more than three-quarters of CSM sugar beet growers have already signalled that they would like to join the new cooperative.
Now that the acquisition has been cleared, most of the rest are expected to follow suit.
The Netherlands Competition Authority conducted "a thorough investigation of the effects of the proposed combination of the two sugar producers," said Cosun.
The company said it will now be stronger in the European market, and be able to serve its sugar customers on a larger scale.
Cosun's Suiker Unie division will command around five per cent of the European sugar market.
It is planned that the headquarters of both businesses will transfer to Dinterloord in due course.
The news of the clearance coincides with Cosun's full year 2006 results, in which it reported turnover of €1.469bn - an increase of nearly 10 per cent on the previous year - and operating profit was up to €111m.
However Suiker Unie's operating profit fell sharply due to price pressure - a scenario exacerbated by the EU refunding part of the production levy from the previous sugar campaign.
The CMS acquisition is expected to lead to a on-off increase in sugar turnover for the new owner but overall, in light of the new market organisation and the Cosun's termination of its beet processing in Slovenia, "sugar turnover will continue to decline in the years ahead".
Since a preventative quota reduction has been announced for 2007 of 13.5 per cent and EU levies will be high, Cosun said it expects the result of its sugar activities to be low again in 2007.
While CSM will contribute, "only limited synergy gains" are expected to be realised in the first year, while financing and amortisation charges will be higher.
