Arla Foods Intends to Acquire Friesland Foods Fresh Nijkerk

Arla Foods amba and Royal FrieslandCampina N.V. have reached agreement in principle about the sale and purchase of all the shares in Friesland Foods Fresh Nijkerk by Arla Foods. The transaction includes the Friesland Foods Fresh Nijkerk fresh dairy business, its assets and the brands Breaker, Milk&Fruit and Kwarkyoghurt. A ten-year licence agreement has been entered into for the use of the Friesche Vlag brand for fresh dairy products in the Netherlands only. The former Campina brand, Melkunie, is also part of the transaction. The transaction is expected to be completed in the second quarter of this year. FrieslandCampina is guaranteeing the supply of raw milk to the factory in Nijkerk until 1 January 2017. The transfer of the Friesland Foods Fresh operations to Arla Foods is partly dependent on European Commission approval.

Friesland Foods Fresh in Nijkerk produces milk, buttermilk, natural and fruit-flavoured yoghurt, quark yoghurt, custard, porridge, Milk&Fruit and Breaker. In Nijkerk, fresh dairy products are produced under the brand Friesche Vlag and for supermarket own brands. Just over 500 people work at the Nijkerk site, including 150 temporary staff. Revenue is approximately 215 million euros (2007).

Arla Foods' CEO Peder Tuborgh said: "This is an important step for Arla Foods, which makes the Netherlands a new core market for our company. We believe we have a lot to offer Dutch consumers, and we are pleased that we've been able to enter into this agreement with Royal FrieslandCampina, which allows us to enter a dairy market with such proud traditions. It is in perfect alignment with our strategy to become the preferred dairy producer for consumers in Northern Europe. We will respect all the current employment terms and conditions with the staff in Nijkerk and intend to continue the existing operations."

Cees 't Hart, CEO of Royal FrieslandCampina is pleased with the agreement with Arla Foods: "It's important that we were able to enter into an agreement with Arla Foods about the sale and purchase of Friesland Foods Fresh in Nijkerk just a few months after the merger between Friesland Foods and Campina. With the proposed sale to Arla Foods, Friesland Foods Fresh will become part of a robust dairy company. It means that we are complying with the decision of the European Commission to guarantee the continuity of a strong second player on the Dutch fresh dairy market for customers, employees and suppliers."

Completion of the sale and purchase is conditional upon the approval of the competition authorities of the European Commission, the Dutch competition authorities (NMa) and upon consultation of the works council of Friesland Foods Fresh in Nijkerk. The purchase price will not be disclosed.

The European Commission approved the merger between Friesland Foods and Campina on 17 December 2008 on condition that the fresh dairy operations in Nijkerk were sold to prevent the new company from holding too dominant a position on the Dutch fresh dairy market.

Arla Foods is one of the international dairy industry's key players. Eight thousand Danish and Swedish cooperative members own the cooperative, Arla Foods amba. The cooperative members supply Arla Foods' most important raw material, cows' milk, on a daily basis. We want to create the best dairy business for 250+ million consumers in Northern Europe. We want to build a strong Arla brand and to be a global leader in added value butter and added value cheese. Arla Foods has sales offices in 27 countries and production facilities in 12. The company's dairy products are exported to more than 100 countries. Arla Foods is the world's biggest supplier of organic dairy products. Arla Foods' ambition is to minimise emissions and continually improve its environmental performance throughout the supply chain in order to contribute to organically sustainable development. Arla Foods' mission is to provide modern consumers with milk-based products that offer inspiration, confidence and well-being.

Royal FrieslandCampina is a multinational dairy company that produces and markets natural, nutritious and high-quality dairy products and ingredients. Taste, health, convenience and reliability are key characteristics. Based on the 2007 figures, FrieslandCampina's annual revenue amounts to 9.1 billion euros. The company employs 22,000 people and has about 100 production and sales locations in 25 different countries. FrieslandCampina's activities are organised in four business groups: Consumer Products Western Europe, Consumer Products International, Cheese & Butter and Ingredients. The product range consists of consumer milk, milk in powder and concentrated form, dairy drinks, yoghurts, desserts, cream, coffee creamers, baby and infant food, cheese, butter and ingredients. Its most important brands are Campina, Chocomel, Completa, Dutch Lady, Frisian Flag, Foremost, Friesche Vlag, Betagen, Fristi, Vifit, Landliebe, Milli, Mona, Optimel, Optiwell, Puddis, Pottyos, Fruttis, NoyNoy, Peak, Rainbow, Yazoo, Frico, Milner, Buttergold, Valess, Debic, DMV, Kievit, Domo, Creamy Creation, Nutrifeed, Appelsientje, DubbelFrisss and CoolBest. The business is based on a cooperative model. The 17,000 member dairy farmers of Zuivelcooperatie FrieslandCampina are the owners and the suppliers of the milk.