Arla to merge with Milk Link and MUH

Arla Foods is at a major turning point in the British and German markets, the company says. Two planned mergers will immediately increase Arla’s revenue by DKK 9 billion (€1.2bn) per year, thereby strengthening Arla Foods’ position as one of Europe’s leading dairy groups. 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.

Arla Foods is today announcing plans for 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.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.

“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.”

The mergers will bring Arla a step closer to a number of the main objectives in the Group’s Strategy 2015, the co-operative notes. 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 DKK 75 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 DKK 9 billion. In 2011, Arla’s revenue amounted to DKK 55 billion. Together, the companies are expected to generate revenues of DKK 70 billion by 2013.

The mergers are also way forward 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.
“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.

“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,” says Neil Kennedy, Milk Link Chief Executive.