26 April 2013

5 minute read

The company want to give full operational, organisation and legal independence to its food sector which operates in the Netherlands, Germany and a number of export markets and its ingredients sector, which is a global operation.

VION's Executive Board arrived at the decision to separate Food and Ingredients as they both serve their own markets and clients, face their own challenges and adhere to their own company strategies.

The company said it will focus on restoring the strength of its food and meat business with a reorganisation in the Netherlands and Germany.

The company has already divested itself of its UK operations with the pig sector being taken over through a management buy-out and the red meat and poultry sector being sold the the 2 Sisters group.

VION said that it will be seeking a new (co)shareholder to help achieve further development and growth for ingredients that its says has a strong, healthy, independent financial and organisational basis.

VION Food, with its slogan ‘Passion for Better Food’, focuses on the pork and beef markets in the Netherlands and Germany, making it close to consumers.

The Netherlands, Germany and a number of select international markets are geographically aligned in such a way that they offer VION Food significant opportunities to achieve far-reaching operational integration, synergy and a considerably lower cost base, the company said.

The food sector employs approximately 14,000 staff.

VION Ingredients, with its slogan ‘Improvement by Nature’, is active with a large number of companies, which manufacture added-value products such as gelatine, proteins and fats from slaughterhouse by-products.

These are successfully marketed to B2B markets such as the pharmaceutical, cosmetics, food, feed, energy and technology sectors.

The ingredients sector employs approximately 6,000 staff.

Company Reducing in Size

The strategic decision to make Food and Ingredients independent entities means the VION Holding will become strongly financial in character, the company said.

In line with the announcements on 19 November 2012 and 23 January 2013, the Holding will be further reduced in size. A number of supporting services provided by the Holding will become part of Food and Ingredients' operational activities.

The Board of VION and the shareholder have concluded that making Food and Ingredients independent is the best option.

This strategy is partly based on the fact that the acquisitions and the increase in scale at Food over the past decade have not delivered the expected results.

In addition, the on-going poor market conditions, particularly in the European pork sector, have forced the company to make choices.

Company Talking to Banks

For the shareholder, it is important that it continues to be involved in Food: a company of major social and agricultural importance, with good client relations and with a community of professionals who have, thanks to a new, no-nonsense approach and a lot of hard work started down the road to result recovery.

Constructive talks are underway with banks concerning independent financial structures for both Food and Ingredients.

The independence of Food and Ingredients follows on from the divestment over the past six months of the food activities in the UK and the sale of a number of non-core business activities including Banner Pharmacaps (supplier to the pharmaceutical industry) and Oerlemans Foods (deep frozen vegetables and potato products).

These divestments were announced on 19 November 2012 and were the immediate result of the disappointing figures for food activities in 2011 as well as 2012 and the necessity of greatly reducing the debt position.

The company said that VION will become a fundamentally different organisation due to the divestment of Food UK, Banner Pharmacaps and Oerlemans Foods as well as the organisational and legal independence of Ingredients and Food.

These strategic steps will lead to material changes to the size and composition of the group and, as a result, its financial reporting. This is why VION, in consultation with the external accountant, has decided to postpone the publication of the 2012 annual report until more clarity has been achieved with regard to the exact results of this process.

The company said that it has had a financially tough year.

The EBITDA was nevertheless once again positive. The divestments of Food UK, Banner Pharmacaps and Oerlemans Foods partly took place in 2012 and partly in 2013. On balance however, the abovementioned divestments provided insufficient yields to arrive at a substantially reduced debt position.

Although the results are yet to be determined exactly, it is already clear that the impairments amounting to €500 million will affect the net result and, as a result, the Holding's equity. The intended sale of Ingredients is expected to lead to a normalised financial position.

Changes to Management and Executive Board

Food and Ingredients' independence demands a number of administrative modifications and the restructuring of the management of both companies. Ingredients and Food will each have their own Management Board and CEO. The latter two will also become members of the Executive Board of the financial holding company.

Ingredients will continue to be led by its CEO Dirk Kloosterboer. At the moment Food is led by interim CEO Stefaan Vansteenkiste. A new CEO for Food is expected to be appointed in the foreseeable future.

The composition of the Holding's Executive Board is also set to change. Dirk Kloosterboer will step down as the Holding's chairman so he can concentrate fully on Ingredients. As the CEO of Ingredients he will continue to be a member of the Holding's Executive Board. The Chairman of the Holding's tasks and responsibilities – which will become financial in nature and will focus, among other things, on the sale of Ingredients – will be taken over by Rob Ruijter, who, in recent months, has been active as an advisor to the Supervisory Board.

Ton Vernaus, CFO and member of the Executive Board will leave the company as of 1 May 2013. His position is not expected to be filled.

This means that, as of 1 May 2013, the Holding's Executive Board will consist of the following members Rob Ruijter (Chairman), Peter Beckers (Member), Dirk Kloosterboer (CEO Ingredients) and Stefaan Vansteenkiste (interim CEO Food).

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