Arla Foods and IBM in 7-Year, 250m Euro Outsourcing Agreement

IBM to Manage IT Infrastructure for Northern Europe's Largest Dairy Product Manufacturer

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COPENHAGEN, DENMARK and STOCKHOLM, SWEDEN - 15 Jun 2006: IBM and Arla Foods, one of Europe's largest dairy companies, today announced a seven-year strategic agreement for IBM to manage all IT solutions at the dairy company's operations in Denmark and Sweden. The agreement becomes effective July 1.

The agreement covers the development and maintenance of Arla Foods' IT solutions and infrastructure -- including consulting services, development, maintenance, and facility management services. IBM will provide a flexible solution expected to bring significant cost savings enabling Arla Foods to grow and strengthen its international leadership in the dairy industry.

"As we strive to continue to focus on our core business, dairy operations, we also want a strong IT partner who can play a major strategic role for our company," says IT Director Jesper Erichsen, Arla Foods. "We have worked with IBM for many years and on the basis of this experience we are now ready to give IBM end-to-end responsibility for our IT function."

Arla Foods will leverage IBM's global leadership in technology innovation and consumer product solutions. IBM will work closely with Arla Foods, supporting future business initiatives and global ambitions. A joint initiative has been created to develop new business solutions and technologies that will enable Arla Foods to improve products, services and processes across the world.

"Arla Foods is known for being at the forefront of the international dairy industry," says Bill Gilmour, IBM's Global Consumer Product Leader. "Along with being able to take advantage of IBM's knowledge and experience in the food processing and retail industries, this agreement will provide a flexible solution that will enable Arla Foods to adjust to the fast-changing demands of a competitive market."

130 IT specialists from Arla Foods in Denmark and Sweden will transfer to IBM. For the first 12 months these employees will continue to work from their current Arla locations.

More information

For more information on Arla Foods, visit www.arlafoods.com.

For more information on IBM, visit www.ibm.com.

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