Mergers in the farm supply business

Bonnesen Advokater assists Danish Agro A.m.b.A. and DLG A.m.b.A. in taking over the farm supply businesses S.A.B. A.m.b.A. and Aarhusegnens Andel A.m.b.A.

S.A.B. A.m.b.A. Landbrugets Andel
In the autumn of 2009, Bonnesen Advokater assisted the farm supply company Danish Agro A.m.b.A., which has an annual turnover of more than DKK 4.2 billion, in taking over its competitor S.A.B. A.m.b.A. Landbrugets Andel, when the latter was faced with financial difficulties.

In that connection, Bonnesen Advokater handled the drafting of all necessary agreements involved in the takeover and reconstruction of S.A.B. A.m.b.A. Landbrugets Andel. It was a basic condition in connection with the takeover that the necessary financing agreements were entered into with the lending institutions that had granted S.A.B. A.m.b.A. Landbrugets Andel substantial credit lines, and the firm's attorneys also assisted Danish Agro A.m.b.A. in this respect.

After obtaining the necessary financing commitments and the approval of the members of S.A.B. A.m.b.A. Landbrugets Andel of the takeover/reconstruction, which meant that no member would suffer a loss, Bonnesen Advokater assisted in preparing the notification to the competition authorities with a view to obtaining the Competition Council's approval of the takeover in accordance with the competition act's provisions on merger control.

Aarhusegnens Andel A.m.b.A.
Due to some very turbulent market conditions in the farm supply business, which were the cause of S.A.B. A.m.b.A. Landbrugets Andel's financial difficulties, Aarhusegnens Andel A.m.b.A. also had to realise at the beginning of January 2010 that the company was facing a financial collapse. This led the board of directors of Aarhusegnens Andel A.m.b.A. to seek a solution involving the two largest farm supply companies in Denmark, DLG A.m.b.A. and Danish Agro A.m.b.A.

Bonnesen Advokater assisted DLG A.m.b.A. and Danish Agro A.m.b.A. with the rescue operation for Aarhusegnens Andel A.m.b.A. The aggregate annual group turnover of DLG A.m.b.A. and Danish Agro A.m.b.A. amounts to app. DKK 38 billion, whereas Aarhusegnens Andel A.m.b.A. had an annual turnover of app. DKK 3.5 billion. A consortium consisting of DLG A.m.b.A. and Danish Agro A.m.b.A. was set up for the purpose. Bonnesen Advokater drafted the necessary documents in connection with the transaction. This transaction also needed to be approved by the Competition Council.

Because of Danish Agro A.m.b.A.'s takeover of S.A.B. A.m.b.A. Landbrugets Andel and the fact that Aarhusegnens Andel A.m.b.A. until its collapse was the second largest farm supply business in the country, the takeover of Aarhusegnens Andel A.m.b.A. gave the Competition Authority cause for concern with regard to the market situation after a possible takeover that could lead to a weakening of the effective competition.

Consequently, the Competition Council approved the takeover of Aarhusegnens Andel A.m.b.A. on 26 February 2010 on the condition that the consortium had to offer feed factories with appurtenant facilities at the Port of Aarhus for sale to interested competitors through a trustee and in accordance with detailed guidelines to ensure a transparent auction process. The purpose of this condition was an attempt to create a competition situation which - in the opinion of the Competition Council - would mean that the consortium's takeover of Aarhusegnens Andel A.m.b.A. would not materially impair the effective competition.

Concurrently with the approval of the takeover of Aarhusegnens Andel A.m.b.A., the Competition Council finally approved Danish Agro A.m.b.A.'s takeover of S.A.B. A.m.b.A. Landbrugets Andel. This approval was issued unconditionally.