The sale of co-products, the Belgium activities of organic feed producer, Reudink, and horse feed producer, Pavo, are not included in the deal.
The Dutch group will receive €25m (US$27.2m) from Arvesta for its Belgium business. It will be paid in cash at the closing of the transaction, which is subject to approval by the competition authority in Belgium.
ForFarmers expects the deal to be finalized in the second half of 2023.
Asked what prompted the decision to divest the assets, Caroline Vogelzang, director investor relations, ForFarmers, told us the agricultural market in Belgium has been challenged in recent years, due partly to the outbreak of African Swine Fever (ASF) a few years back, but also because of the growing pressure on the sector to reduce its environmental footprint, and other factors.
“Industry consolidation and cooperation is consequently increasing. In that context, Arvesta and ForFarmers discussed options, with today’s outcome the result [of those negotiations].”
The new assets will strengthen Arvesta’s position in the Belgian market, with it taking on the 80 employees of ForFarmers Belgium and its 420K ton capacity production site in Izegem in West Flanders and a mill and site in Ingelmunster.
Arvesta already has feed production sites in Aalter, Merksem, Kortrijk, Andenne and Hombourg.
Transfer of Dutch assets to ForFarmers
ForFarmers will continue to produce feed for the Belgian broiler sector, but in the Netherlands, and Arvesta will transfer its feed activities in the broiler sector in the Netherlands to ForFarmers.
“ForFarmers was producing the broiler feed for the Belgian market in the Netherlands. We have agreed to continue to do so in order to ensure continuous smooth deliveries to customers. This means that Arvesta will be ForFarmers’ customer.
“Arvesta was producing feed in Belgium for broiler farmers in the Netherlands. By transferring these activities to ForFarmers, it will be clear that Arvesta caters to the Belgian and French broiler market, while ForFarmers serves the Dutch one,” explained Vogelzang.
UK merger abandoned
In February this year, ForFarmers and 2Agriculture announced that they were abandoning their proposed UK joint venture (JV) plans. In coming to that decision, they said they took into consideration the current impact on their respective businesses, the duration and costs involved and the impact of the process on both employees and farmers.
The planned tie-up was under investigation by the UK Competition and Markets Authority (CMA), with that watchdog rejecting the remedies put forward by both parties to address its concerns that the merger would result in UK farmers paying higher prices to feed their poultry.