European dairy co-operative Arla Foods has announced plans for two major mergers—with German dairy Milch-Union Hocheifel and the UK’s Milk Link.
Milch-Union Hocheifel (MUH) is Germany’s eighth largest dairy with owners in Germany, Belgium and Luxembourg. Milk Link is the UK’s fourth largest dairy.
If the mergers are finalised and approved, Arla will be represented by owners in its four largest markets: the UK, Sweden, Denmark and Germany, as well as Belgium and Luxembourg.
The deal will also immediately increase Arla’s revenue by DKK 9 billion per year. Together, the companies are expected to generate revenues of DKK 70 billion by 2013.
MUH and Milk Link will both benefit from greater access to more markets, a broader product portfolio and a more stable return for their owners, Arla said.
Arla Foods is a global dairy company and a co-operative owned by Danish, Swedish and German dairy farmers. The company has production facilities in 13 countries and sales offices in a further 20, with a total of more than 17,000 employees.
Arla’s products are sold under the Arla, Lurpak and Castello brands in more than 100 countries, its core markets being Denmark, Sweden, the UK, Finland, Germany and the Netherlands.
Commenting, Peder Tuborgh, CEO of Arla Foods, said: “If the owners agree on these mergers, it will strengthen Arla Foods’ position as one of Europe’s leading dairy companies: a broad ownership, which delivers significant volumes and a very strong product mix—both for consumers and for the industry—under well known brands as well as own label.
“Both Milk Link and Milch-Union Hocheifel are strong, well run dairy groups, which, with their product portfolios and production systems, will strengthen our business in both countries.”
He continued: “In each of the three companies, the aim is to create value for our farmer owners in the form of a strong milk price. This will also be the case going forward, and our ability to deliver good results will be strengthened if these plans are realised.”
Chairman of Arla Foods Åke Hantoft added: “All three dairy companies have been created by milk producers who, through investment, have built up companies that we can be proud of. Together, we’re now creating a company that will be well placed to take milk, our raw material, and create the highest possible value from it.
“The strength and value lies in the fact that a co-operative dairy can rank among the world’s leading dairy companies, and this cannot be underestimated.”
The mergers will mean that Arla Foods will grow from 8,024 co-operative owners in Denmark, Sweden and Germany to 12,300 co-operative owners in Denmark, Sweden, Germany, Belgium, Luxembourg and the UK.
Subject to regulatory approval, the mergers are expected to take effect in 2012.
