The Board of Representatives of Kløver Mælk on Thursday approved the proposed merger with MD Foods by a clear majority - 142 votes against 41. In a separate move, MD Foods' Board of Representatives unanimously backed the merger which is the largest ever in the history of the Danish dairy industry.
The merger between Denmark's two largest dairy groups will be backdated to take effect from the beginning of the dairy year, i.e. September 28, 1998. The enlarged company, which will continue under the MD Foods' name, will account for 90 per cent of Denmark's milk.
Although the two Boards of Representatives voted in favour of the merger, individual Kløver Mælk co-operative owners will be given four weeks to decide whether to stay with the merged company.
The merger became a reality after the managing directors of the two groups, Knud Hedegaard Madsen, Kløver Mælk, and Jens Bigum, MD Foods, prepared a joint report on the advantages and disadvantages of a full merger. As the competition between the two companies has for some time been highly detrimental to both parties, Knud Hedegaard Madsen and Jens Bigum, at the suggest of the President of Denmark's Agricultural Council, Peter Gæmelke, and with the support of the respective Boards of Directors, began the talks which led to the merger.
Commenting on the result of Thursday's vote, MD Foods' Chairman, Knud Erik Jensen, said: "Today's meeting will stand out as the best in the history of MD Foods." Looking back to those who formed MD Foods in 1970, Knud Erik Jensen continued:
"It has always been MD Foods' intention for the Danish co-operative dairies and Danish milk producers to join together in order to secure a strong position in the competition against the dairy industries in the rest of the world. Today means that we have achieved a long-standing ambition."
"One thing is to gather the Danish dairy industry into one large group," Knud Erik Jensen said. "Another is, together with Kløver Mælk's co-operative owners and staff, to create a powerful company which will be able to carry the traditions of Denmark's dairy sector into the next millennium - to the benefit of the co-operative owners as well as staff. This is a challenge which faces everyone who works in the Danish dairy sector."
Following the merger, MD Foods' Board of Directors will be increased by 5 members, elected by Kløver Mælk, until scheduled elections take place in the year 2001.
During the transitional phase, Kløver Mælk's staff will elect five staff members to MD Foods' Board of Representatives.
Kløver Mælk's dairies will become part of MD Foods' divisions with immediate effect. Managing Director, Knud Hedegaard Madsen, will remain in his post for a further four weeks after which he has expressed the wish to retire.
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