Aarhus & Karlshamns become major force in fats

By Lorraine Heller

- Last updated on GMT

Related tags Mergers and acquisitions Fat

Two leading European manufacturers of oils and fats for the food
industry last week joined forces in a move the companies hope will
allow them to significantly expand their businesses in the US and
Northern Europe.

Denmark's Aarhus and Sweden's Karlshamn, which supply speciality fats and oils for a wide range of products including bakery, confectionery and dairy goods, first announced their intention to merge in May this year.

The new company, AarhusKarlshamn, today announced that its new organisational structure is in place, saying it "combines the best of the two merged companies."

"We now have the opportunity to combine deep knowledge of vegetable oils with extensive knowledge of the markets in Europe, Nafta, South America and Asia.

We can meet the demands of the customers with production in seven countries.

I see a very strong company emerge,"said AarhusKarlshamn managing director Jerker Hartwall.

The new company, which will employ 2,500 staff, forecasts a turnover of around SEK 10bn (€1bn).

The merger reflects a trend among businesses in today's archly competitive food industry climate to consolidate for strength.

The rising power and ongoing growth of the multiple retailers is putting constant pressure on ingredients companies to keep up with the pace, deliver products at competitive prices and guarantee supplies.

A gain in critical mass through consolidation, and economies of scale, are two of the only routes open to them, providing sufficient leverage to meet the challenge.

"The strategic rationale behind combining the companies has long been evident as it offers prospects to capitalize on a stronger platform, thereby improving the market positioning vis-à-vis competitors," said AarhusKarlshamn in a statement.

"The combined entity is believed to be able to achieve substantial synergies both in terms of improved utilisation of the existing plants and equipment, but also in terms of opportunities for improved capital expenditures," it added.

External links to companies or organisations mentioned in thisstory: AarhusKarlshamn Aarhus Karlshamn

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