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Arla Foods and Milko Hold Merger Talks

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Arla Foods and Milko Hold Merger Talks

Arla Foods and Milko Hold Merger Talks
June 10
11:52 2011

The boards of Milko and Arla Foods are discussing a proposed merger of the two Scandinavian dairy co-operatives. Following an unsatisfactory profit performance in 2011 and in order to avoid a future liquidity issue, Milko, one of Sweden’s largest dairy companies, approached Arla with a view to investigating the possibility of a merger.

“At Milko, our finances have been imbalanced for some time and in recent years we have been forced to take several radical cost-cutting initiatives. However, sales development has continued to be very weak in 2011 and the board has therefore decided to dramatically reduce the milk settlement price,” says Milko spokesman Lars Reyier. “The number of dairy cows in Sweden has fallen by almost 50% since 1985. As elected representatives we therefore have both a mandate and a responsibility to seek out modern and unselfish structural initiatives on the dairy market that can provide our members with the best possible market and settlement price for the milk they produce.”

The basic principle of the merger is that the Milko members will become co-operative members and owners of Arla Foods on an equal footing with existing Arla members. The Milko members will receive the Arla milk settlement price as soon as the merger has been completed and approved the Swedish Competition Authority.

 
“Arla has the strength and the structure required to develop the Milko company and to receive milk from the dairy farmers who will transfer to Arla as a result of the merger, regardless of the volume of milk they supply. A merger is in line with our ambition to inspire the Swedish people on food issues and to create conditions for continuing to produce milk in the region,” explains Ake Hantoft, chairman of Arla Foods.

Milko and Arla have already agreed on Arla’s purchase of the Sundsvall dairy. Arla will take over operations there on 1st July. The deal is, however, entirely separate from the merger negotiations.

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