Dairy merger will create largest player in UK dairy market

Arla Foods amba, one of the largest and most successful European dairy co-operatives, and Milk Link, the UK's leading dairy farmer co-operative with a creamery in Malpas, Cheshire, and operations in Oswestry, Shropshire, have announced a proposed merger.

The merger will create the largest player in the UK dairy market which will have a combined turnover in excess of £2 billion, processing more than three billion litres of milk per annum, approximately 24 per cent of total UK production.

The move has been welcomed by the industry. The Royal Association of British Dairy Farmers said it will strengthen UK dairy producers' positioning and their resilience to global price pressure and could prove to be a catalyst for further radical restructuring within the UK processing sector.

NFU dairy board chairman Mansel Raymond said the merger would lead to a stronger future for the industry.

"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," he said.

"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.

"Arla Milk Link UK, the result of the merger, will be a corporate member of Arla Foods Amba with two positions for UK directors. This will be a truly European board to lead a truly European co-operative, in which UK farmers will have an equal stake."

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.

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 amba Board of Representatives and relevant regulatory authorities.