Dairy giant Arla Foods has announced a proposed merger with Germany’s eighth largest dairy co-operative, Milch-Union Hocheifel (MUH).
The deal, alongside Arla’s proposed merger with UK co-operative Milk Link, will immediately boost Arla’s revenue by DKK9bn (US$1.55bn) per year, the Denmark-based company revealed this morning (22 May).
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The two transactions would strengthen the company’s position as one of the largest dairy groups in Europe, the dairy firm suggested. Arla would gain co-operative owners in the UK for the first time, while in Germany the group’s owners would be “significantly expanded”, Arla said.
“The owner representatives in Arla Foods and MUH and the members of Milk Link will make a decision on whether to merge on 26 June, and the mergers will require clearance from the regulatory authorities. If the mergers are finalised and approved, Arla will be represented by owners in its four largest markets, the UK, Sweden, Denmark and Germany, and also in Belgium and Luxembourg,” Arla Foods said in a statement.
Arla did not give financial details of the planned takeovers, but said it expected both mergers to take effect this year.
“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,” said Peder Tuborgh, CEO Arla Foods.
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By GlobalDataHe emphasised that, as with Arla Foods, both companies are owned by dairy farmers.
“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.”
Following the mergers, Arla will be the UK’s largest dairy company and will rank third in Germany – both stipulated objectives for Arla by 2015.
Arla said the mergers are also a “significant step” for MUH and Milk Link who both want to “ensure access to more markets, a broader product portfolio and a more stable return for their owners – by virtue of Arla Foods’ greater access to worldwide markets”.
“We’re already a European dairy company, but through a merger with Arla, we’re pursuing our strategy of becoming an international company that is able to provide a favourable and stable milk price,” said MUH CEO Rainer Sievers. “A merger will strengthen our position in Germany and mean that our products gain access to more markets.”
Both mergers will require approval from the regulatory authorities.
