Two planned mergers will increase Arla’s revenue by DKK 9bn per year, thereby strengthening its position as one of Europe’s leading dairy groups.
As well as its proposed merger with UK co-operative Milk Link, Arla Foods has also announced plans for a merger with Germany’s eighth largest dairy, the co-operative Milch-Union Hocheifel (MUH), which has owners in Germany, Belgium and Luxembourg.
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.
The growth goes hand in hand with Arla’s Strategy 2015, the key objective of which is to improve returns for its owners by, among other things, enhancing their positions in the core markets of the UK and Germany.
“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,” says Peder Tuborgh, CEO Arla Foods.
“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.”
Peder Tuborgh emphasises 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.”
The mergers will also be 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.
Rainer Sievers, CEO in MUH, said: “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.
“A merger will strengthen our position in Germany and mean that our products gain access to more markets.”
Neil Kennedy, Milk Link chief executive, said: “Our proposed merger will bring together two successful, growth orientated farmer-owned dairy businesses with highly complementary positions in key markets, brands and customer bases.
“It reflects and reinforces Milk Link’s position as the UK’s leading dairy businesses and recognises and rewards the ongoing loyalty and commitment of our Members.”
Source: Arla Foods
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