The deal, first announced in April, sees Arvesta take over the compound feed business, the employees, the production site in Izegem and the mill in Ingelmunster in West Flanders from the Dutch group.
The new assets will strengthen Arvesta’s position in the Belgian market. That company already has feed production sites in Aalter, Merksem, Kortrijk, Andenne and Hombourg.
The sale of co-products, the Belgium activities of organic feed producer, Reudink, and equine feed producer, Pavo, are not included in the deal.
The transaction is set to be finalized mid-October. ForFarmers is set to receive €25m (US$27.2m) from Arvesta for its Belgium business.
Asked what prompted the decision to divest the assets, Caroline Vogelzang, director investor relations, ForFarmers, told us in April that 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].”
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 UK company, 2Agriculture, decided to abandon their proposed joint venture (JV) plans for the UK, taking 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 in January 2023 to address its concerns that the merger would result in UK farmers paying higher prices to feed their poultry.
The planned JV was first announced in July 2022.
ForFarmers UK and 2Agriculture both manufacture and supply chicken and other types of poultry feed in the UK. Between them, the two entities operate 19 mills in the region. The competition authority's Phase 1 review of the proposed tie-up found there could be challenges arising from combining the operations in relation to the supply of competitively priced poultry feed at a local level, and on the downstream supply of chicken in the UK.
The CMA also said it had received complaints from customers and other market participants about the potential impact the JV could have on the choice of feed suppliers as well as on feed prices.