Danish Crown Considers Going Public

DENMARK - The Board of Danish Crown has announced its intention to investigate whether to seek funding from outside sources for its future growth.

3 August 2011

3 minute read

Europe

Pork and beef exporter Danish Crown could break from tradition and go public or court international investors in order to finance its future growth plan, says its board.

A spokesman for Danish Crown told TheCattleSite that the move is being considered, but no decision has been made yet.

"The representatives haven't decided, but it is not going to take that long. Maybe later this year," he said.

The Copenhagen Post reports that the company is now fully-owned by a co-operative of nearly 10,000 independent Danish pig and cattle farmers, with roots going back 124 years. In addition to its invested suppliers, the company controls 25 slaughterhouses and meat-packaging plants, and nearly 100 foreign sales offices worldwide. It is the world's number one pork exporter and Europe's largest pork producer.

But if it is to stay competitive and profitable, Danish Crown has to raise some five billion kroner in development capital, says board chairman, Niels Mikkelsen, and that money is not likely to come from the cash-strapped farmers in the co-operative.

Mr Mikkelsen told the Jyllands-Posten newspaper: "The company, and thus Danish pig producers, are experiencing a time of historic challenges, where we have to become competitive to ensure our future."

Therefore, while much of the country was on summer holidays, Danish Crown's members were meeting to decide its future – and whether to break from its co-operative tradition and go public. Whatever the decision, it will be among the most important in the firm’s history.

Mr Mikkelsen continued: "The goal is for Danish Crown to be one of the three biggest food producers in Europe. There isn't a doubt in my mind that Danish Crown will have to grow quite considerably in coming years to secure itself a lucrative business for the future."

He is convinced that if the company does not raise the capital and take the necessary steps to grow, its competitive edge will erode in comparison with other European meat producers who are rapidly consolidating on an international level. However,Mr Mikkelsen has yet to convince the farmers.

Henrik Mortensen, chairman of Danske Svineproducenter, the national association of Danish pork producers, warned against rushing into a public sale or inviting in outside investors without a better understanding of the consequences for farmers.

Mr Mortensen told Berlingsketoprts: "The decision has to be optimal for the farmers who have invested in Danish pig production and who own the slaughterhouse. Co-operative slaughter plants are a tool for ensuring good prices for our products. We should only sell major leverage in the company to help it grow if it is going to ensure a better future for the pig farmers."

The Copenhagen Post report adds that Danish Crown is co-operatively owned by 9,800 farmers and employs 23,000 workers, and that the country's first co-operative slaughterhouse was established in Horsens in 1887. It and many of the original co-operative pig slaughterhouses are part of Danish Crown today.

In 2009/2010, Danish Crown slaughtered some 19.4 million pigs: 16.3 million in Denmark alone and 3.1 million in the UK, Sweden and Poland. In the same period, Danish Crown slaughtered 279,000 cattle.

The company is the world's biggest pork exporter, selling to 130 different countries, with total revenue of 45 billion kroner (DKK) in 2009/2010. The US is its largest export market, followed by Japan and Germany.