Danish Crown is a cooperative owned by farmers that supplies pork globally. It has been successful using a lean cooperative model for 125 years. However, to continue international growth, it will need more equity than farmers can provide. It has prepared a new group structure to allow new non-farmer shareholders while maintaining cooperative control. This will provide more financial flexibility to pursue mergers, listings, and investments beyond relying solely on member equity.

1. Coop Summit Quebec 2012
Round table on future COOP financing
Svend Erik Sørensen, Danish Crown

2. Danish Crown is a primary cooperative
• Each single farmer has direct membership
• Supply directly from the single farm to the coop
under full price transparency
• Elected management in two levels only
• A commercial supply chain – not a political body
• All non-retained earnings are paid back to the
members at year-end
• A robust business model with a high implicit
credit rating

3. Our development is based on the coop model
• Our lean and direct coop model has served us
for 125 years and put us on the global scene
• Investments beyond the home base requires
more equity
• Sooner or later we will reach the limit of what
equity can be sourced from members
• The GFC has increased the need for equity
• COOPs with an international growth strategy
should start looking for other equity sources

4. Limitations in attracting more coop equity from
members
• European farmers under financial pressure with
limited debt capacity
• Many would prefer to invest in developing their
own farming enterprise
• Concentration among farmers increases the
challenge
• Collective investment decisions become difficult
~ individual investments may not be coop
compatible
• A potential barrier for attracting new members

5. Value creation and control – option 1
Value creation Full coop
by growth and control given
development up but growth
continued
Maximum
growth under full
COOP regime
Time

6. Value creation and control – option 2
Value creation
by growth and Control maintained
development but growth and
value lost
Maximum
growth under full
COOP regime
Time

7. We have prepared our group structure for new investors
BEFORE AFTER
New
shareholders
Danish Crown can be Danish Crown
COOP added COOP
Danish Crown Ltd.

8. ... and thereby increased our financial flexibility
Member
equity
Financial
Transfer to Ltd. investors
structure
Internat.
mergers
Listing /
Here we are IPO

9. To be in place if and when the equity base is
expanded:
• The company must be a good investment !
– earnings, technology, market position, growth
potential
• Governance model satisfying all stakeholders
• Transparent and market based trading and
reporting
• The right time window

10. • We should open the door for new partners
• We need to make it attractive for new
partners to enter through the door
• We need to ensure a fair ticket price