Danish dairy cooperative Arla today announced plans for major acquisitions in Britain and Germany. Arla Foods aims to merge with Germany’s Milch-Union Hocheifel cooperative (MUH) and the Milk Link cooperative in the UK.

Following the mergers Arla will become the UK’s largest dairy company and the third largest in Germany. A spokesperson for the group said no money would be exchanged but that mergers are expected to take effect before the end of the year.

Decisions on whether to go ahead with the proposals will be taken by MUH and Milk Link members on 26th June. If the merger goes ahead Arla Foods will be owned by 12,300 cooperative owners. Upon announcing their plans this morning, Arla Foods and Milk Link said in a joint statement their merger would fulfil strategic objectives and provide a sustainable future for member suppliers.

The acquisitions are expected to boost the group’s revenue by around £1 billion per year. The newly formed behemoth is expected to have an annual turnover in excess of £2 billion in the UK alone and be responsible for a quarter of the UK’s milk production.

Commenting on the Merger, Neil Kennedy, Milk Link’s Chief Executive, said this morning, “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. It will, we believe, provide their dairy farm enterprises with long term security, stability and sustainability.”

The NFU also welcomed news of the proposed amalgamation. The union’s Dairy Board chair, Mansell Raymond, said that the merger “lit a clear path for a truly European cooperative in which UK harmers will have an equal stake.”

He said, “This is a hugely significant event and is the result of the patience, faith and commitment of Milk Link members who have been investing in their own future over the past 12 years. UK farmers have looked on enviously at the apparent disparity between UK and mainland European milk prices, but also at the strength of larger European dairy co-operatives which have used their scale and efficiency to command market leading prices and build market leading brands. This merger puts Milk Link members in a far stronger place with a more secure future.”

It is hoped that members of the new conglomerate will eventually benefit from returns on par with Arla’s Swedish, Danish and German suppliers. However, the proposals remain subject to approval by MUH and Milk Link’s farmer members, Arla’s board and regulators in the UK and Germany.

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