Almost eleven thousand Danish, Swedish and British dairy farmers are uniting in a joint venture that will see farmers within Arla Foods Milk Partnership (AFMP) become part owners of Arla Foods UK plc, through their investment company, Milk Partnership Ltd (MPL).
The joint venture will further strengthen the relationship between Arla Foods amba farmers and AFMP farmers (MPL members) and will give UK farmers more insight into their processor's business.
Under the joint venture a new company will be established, which will hold a seven per cent share in Arla Foods UK plc. Arla Foods amba and MPL will each take a 50-50 stake, with money invested by MPL helping fund further investment in Arla UK's processing business.
In July 2007, Arla Foods confirmed it was initiating a process that it hoped would lead to AFMP farmers, through MPL, acquiring part ownership of the UK business. MPL had previously held a 5.29 per cent shareholding in Arla Foods UK plc before Arla Foods amba acquired 100 per cent of the business in April 2007.
Commenting on the joint venture Arla Foods UK plc's CEO, Peter Lauritzen, said: "Arla Foods amba is a farmer co-operative and is committed to strengthening its relationship with UK farmers. The joint venture underlines Arla Foods amba's commitment to come together with UK farmers so they have an opportunity to input into Arla UK's strategy and share in the success of the UK business."
The joint venture company board will have equal representation from both MPL and Arla Foods amba. The purpose of the board meetings will be to discuss the performance and strategy of the UK business and importantly discuss matters of common interest between UK, Danish and Swedish producers.
Under the joint venture agreement, the level of investment in MPL, for AFMP farmers (MPL members), will be one penny per litre. Due to MPL's previous investment in Arla Foods UK plc, the majority of farmers have already paid in full for their original share allocation. Any overpayment will be returned to members. New members joining the Partnership will pay a 0.2ppl levy, through MPL, over a five-year period, to bring their total investment to one penny per litre.
Jonathan Ovens, Chairman of MPL and AFMP, has welcomed the move. "The joint venture has given us the opportunity to join a family of farmer shareholders and to get closer to, and gain a greater understanding of, Arla's UK business. We are buying into a good strong business and are excited about the company's long-term strategic direction.
"This investment represents completion of MPL's second stage of investment in our milk processor. We believe that the 1ppl investment balances our commitment to Arla against a need not to create a barrier to entry to new members, and for the first time, equalises the investment by all members and returns excess investment to members over the 1ppl level."
Ove Møberg, Chairman of Arla Foods amba, is also delighted: "This initiative unites almost eleven thousand Danish, Swedish and British dairy farmers in a joint venture and allows UK farmers to be part owners of Arla Foods UK plc.
"We have had a good, positive, dialogue with MPL over the last 10 months and welcome the opportunity to work more closely with them in the future."