COPENHAGEN (Reuters) - European meat products group Danish Crown is to buy Tican, securing the future of its smaller rival which has been looking for a buyer for the past year.
Both companies are co-owned by farmers and are not listed on stock exchanges. They announced the deal as a merger on Tuesday, but Danish Crown is the larger company, with revenues of 58 billion Danish crowns ($8.8 billion), ten times that of Tican.
“We have found a model that ... secures a future for Tican,” Tican Chairman Jens Jorgen Henriksen said. He said it would also ensure that their owners, Danish farmers, could continue to contribute to value creation in the Danish food industry.
They gave no financial details on the deal.
Danish farmers and meat producing firms have been hit by a Russian ban on European produce imposed last summer as well as an earlier Russian ban on pork imports on health grounds.
Pig farmers and milk producers have had to deal with falling prices partly due to the Russian ban on European foods.
Danish banks have started to feel the impact in the form of bad loan charges. Jyske Bank on Tuesday warned that 1,700 farmers in Denmark were in serious financial trouble.
Danish Crown and Tican slaughter almost 24 million pigs a year and employ more than 28,000 workers worldwide. Both companies generate most of their revenue outside Denmark and Britain is one of their most important markets.
The merger needs approval from the Danish competition authorities, which will take several months.
($1 = 6.5909 Danish crowns)
Reporting By Alexander Tange; editing by Sabina Zawadzki and Jane Merriman