Posted on 22 May 2012.
Arla Foods is planning two mergers in the British and German marketswhich will immediately increase its revenue by DKr9 billion (Eur1.2 billion) per year and strengthen its position as one of Europe’s leading dairy groups.
Arla Foods is seeking to complete two major mergers – with Germany’s eighth largest dairy, the co-operative Milch-Union Hocheifel (MUH), which has owners in Germany, Belgium and Luxembourg, and with the UK’s fourth largest dairy, the co-operative Milk Link.
As a result of the mergers, Arla will have, for the first time, co-operative owners in the UK, and in Germany the group of owners will be significantly expanded.
The owner representatives in Arla Foods and MUH and the members of Milk Link will make a decision on whether to merge on June 26th 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 andGermany, and also in Belgium and Luxembourg.
The planned mergers are in line 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.
“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,” says Peder Tuborgh, chief executive of Arla Foods. ”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 bring Arla a significant step closer to a number of the main objectives in the group’s Strategy 2015: Arla will be the UK’s largest dairy company and will rank third in Germany; these are both stipulated objectives for Arla by 2015.
Another Arla objective is to achieve a revenue of DKr75 billion by 2015. The two companies, which will become an integral part of Arla Foods if the mergers take place, have combined revenues of approximately DKr9 billion. In 2011, Arla’s revenue amounted to DKr55 billion. Together, the companies are expected to generate revenues of DKr70 billion by 2013.