Dairy industry in the run-up to EU integration

During the final stages of integration into the European Union, many foreign companies have been researching the local dairy market over the last few years, establishing their development strategies. The German company Meggle, Europe’s number one producer of butter, viewed over 14 dairy plants but ultimately chose not make an acquisition. What are the reasons for that? Too high prices for old factories, lacking a strong brand.
After testing the waters for a few years, the German group opened a Romanian branch in mid-October, to manage its marketing, as well as its commercial activities. Not interested in starting production of their own, the Germans at Meggle announced they would intensify imports as of next year, backed by the abolishment of customs duties for dairy products among other things.
Whereas Meggle did not sign any acquisition deal, although it was in talks with several local companies, the Danish white cheese producer Nordex Food has recently closed a transaction for the acquisition of a dairy plant in Campulung.
The seller, local producer Lactag, owns two other plants in Pitesti and Costesti. However, the Campulung-based facility is the smallest of the three, covering 3,500 square metres and with a production capacity of 400 tonnes a month. The Danes estimate they will need to hire 20 people.
Keld Pedersen, manager of Denmark-based Nordex Food said the acquisition made in Romania is part of the company’s strategy to develop on the Eastern European market. The Danes picked Romania because it is one of the biggest markets in the Balkans, while also providing significant development opportunities on the domestic market. For the time being, the Campulung plant is under renovation, so that new equipment can be installed, and Nordex says it is too early to think of further acquisitions. Nordex Foods Romania will start production in April 2007.
Prior to Nordex, the only multinational companies that managed to enter the market by means of acquisitions were Friesland and Hochland.
Dutch group Friesland closed its biggest acquisition deal in Romania in April 2004, when it purchased Cluj-based Napolact, one of the strongest brands in the Romanian food industry. Thus far acquisitions made by Friesland in Romania since the beginning of 2000 have exceeded 17 million euros. Through these operations, the Dutch group will reach a turnover worth over 100 million euros this year, against 91 million euros at the end of 2005.
The German group Hochland also entered the market by means of acquisition, buying two dairy plants in Transylvania, located in Sighisoara and Sovata respectively, in which they had invested over 20 million euros by 2005.

Dairy industry
Meggle opened a Romanian branch in mid-October, to manage its marketing, as well as its commercial activities.
Nordex Food has recently closed a transaction for the acquisition of a dairy plant in Campulung.
Friesland will reach a turnover worth over 100 million euros this year, against 91 million euros at the end of 2005.
German company Hochland entered the market, buying two dairy plants in Transylvania, located in Sighisoara and Sovata, in which they had invested over 20 million euros by 2005.