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Arla, Milk Link to Lead UK Market Through Merger

22 May 2012

EUROPE - The Boards of Arla Foods and Milk Link have announced the proposed merger of the two dairy co-operatives. The proposal will result in the full merger of Milk Link, the UK’s leading dairy farmer co-operative, and Arla Foods, one of the largest and most successful European dairy co-operatives. It fulfils both co-operatives’ strategic priorities and will support their overall goal of providing their dairy farmer owners with a sustainable future.

The merger will bring together two successful and growth orientated farmer-owned dairy processing businesses with complementary positions in key markets, brands and customer bases. It will create the largest player in the UK dairy market, which will process over three billion litres of milk per annum and have a combined turnover in excess of £2 billion.

The merger will mean that Milk Link Members will become part of one of Europe’s leading dairy co-operatives. It is expected to provide the basis for improved returns for Milk Link Members and enable them to achieve, after a transitional period, the same level of return as enjoyed by existing Arla owners.

The proposal will be subject to approval by Milk Link Members, the Arla Foods Board of Representatives and relevant regulatory authorities.

Arla and Milk Link – a complementary merger

The merged business will include the UK’s number one dairy processor which will have established market positions in fresh and long life liquid and flavoured milks, cream, Cheddar and speciality cheese, butter and dairy ingredients. It will have well invested state of the art processing facilities located across the UK complemented by a national milk supply.

The proposed merger builds on the strong and mutually beneficial working relationship that already exists between the two parties. This includes a joint venture in Westbury Dairies Ltd, shared facilities at Lockerbie and Milk Link supplying raw milk to Arla.

This merger will further build on Arla’s ambition to invest in and grow the UK dairy market and enter new categories. Arla Foods has invested over £500 million in the UK dairy industry where it has established some of the country’s most popular dairy brands including Cravendale, Lurpak and Anchor. Processing approximately two billion litres of milk a year, Arla is one of the UK’s leading dairy companies and a supplier of fresh liquid milk, cream and dairy products to the major retailers. Currently, Arla is building one of the world’s largest fresh milk processing facilities in Aylesbury. In line with Arla’s sustainability strategy, the dairy will have zero carbon credentials.

Peter Lauritzen, Chief Executive of Arla Foods UK plc, said: “The enlarged business will be focused on delivering a sustainable future for our farmer owners. It will mean that the largest and most progressive dairy business in the UK will be owned by Milk Link and Arla Foods farmers, as well as by Arla Foods Milk Partnership members, through their shareholding in Arla Foods UK plc, via their investment company, MPL.

“Arla has a strong record of investing in facilities and brands in the UK. Together we will be able to offer British retail and foodservice customers with a full range of high quality dairy products from a single, secure source, making us an even more attractive partner for British retailers. As such, the merger will be good for our farmers, our customers and their consumers and, ultimately, the British dairy industry.”

Commenting further, Neil Kennedy, Milk Link’s Chief Executive, said: “The proposed merger has been unanimously endorsed by the Milk Link Board with the full support of the Milk Link Member Council and we strongly believe that it will create a strong platform for a sustainable future for Milk Link Members and the long term growth of a vibrant British dairy industry. Milk Link’s 1,600 British dairy farmer Members will have a stake in one of Europe’s largest and most successful dairy businesses and play a positive role in its future development. Our farmers will benefit from Arla Food’s long term strategic vision, global scale, broad product and customer base and proven track record in investing in the development and growth of leading dairy brands.

“We believe that the merger will provide the basis for improved returns for our Members and enable them to achieve long-term security and, after a transitional period, the same level of return as enjoyed by existing Arla Foods owners. It reflects and reinforces Milk Link’s current position as one of the UK’s leading dairy businesses; recognises and rewards the loyalty and commitment of our Members and will, we believe, provide their dairy farm enterprises with long term security, stability and sustainability.”

Arla is also planning to merge with the eighth biggest German dairy, the co-operative Milch-Union Hocheifel (MUH).

“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,” says Rainer Sievers, CEO in MUH.

TheCattleSite News Desk



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