The Boards of Arla Foods amba and Milk Link have announced the proposed merger of the two dairy
co-operatives. The proposal will result in the full merger of Milk Link, the UK’s leading dairy farmer
co-operative and Arla Foods amba, one of the largest and most successful European dairy co-operatives. It fulfils both co-operatives’ strategic priorities and will support their overall goal of providing their dairy farmer owners with a sustainable future.
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. It will create the largest player in the UK dairy market, which will process over three billion litres of milk per annum and have a combined turnover in excess of £2 billion.
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 Foods amba owners.
The proposal will be subject to approval by Milk Link Members, the Arla Foods amba Board of Representatives and relevant regulatory authorities.
Arla and Milk Link – a complementary merger
The merged business will include the UK’s number one dairy processor which will have established market positions in fresh and long life liquid and flavoured milks, cream, Cheddar and speciality cheese, butter and dairy ingredients. It will have well invested state of the art processing facilities located across the UK complemented by a national milk supply.
The proposed merger builds on the strong and mutually beneficial working relationship that already exists between the two parties. This includes a joint venture in Westbury Dairies Ltd, shared facilities at Lockerbie and Milk Link supplying raw milk to Arla.
This merger will further build on Arla’s ambition to invest in and grow the UK dairy market and enter new categories. Arla Foods amba has invested over £500 million in the UK dairy industry where it has established some of the country’s most popular dairy brands including Cravendale, Lurpak and Anchor.
Processing approximately two billion litres of milk a year, Arla is one of the UK’s leading dairy companies and a supplier of fresh liquid milk, cream and dairy products to the major retailers. Currently, Arla is building one of the world’s largest fresh milk processing facilities in Aylesbury. In line with Arla’s sustainability strategy, the dairy will have zero carbon credentials.
Peter Lauritzen, chief executive of Arla Foods UK plc said: “The enlarged business will be focused on delivering a sustainable future for our farmer owners. It will mean that the largest and most progressive dairy business in the UK will be owned by Milk Link and Arla Foods amba farmers, as well as by Arla Foods Milk Partnership members, through their shareholding in Arla Foods UK plc, via their investment company, MPL.”
“Arla has a strong record of investing in facilities and brands in the UK. Together we will be able to offer British retail and foodservice customers with a full range of high quality dairy products from a single, secure, source, making us an even more attractive partner for British retailers. As such, the merger will be good for our farmers, our customers and their consumers and, ultimately, the British dairy industry.”
Milk Link farmers will become owners of one of Europe’s leading dairy co-operatives
Commenting further, Neil Kennedy Milk Link’s Chief Executive said “The proposed merger has been unanimously endorsed by the Milk Link Board with the full support of the Milk Link Member Council and we strongly believe that it will create a strong platform for a sustainable future for Milk Link Members and the long term growth of a vibrant British dairy industry. Milk Link’s 1,600 British dairy farmer Members will have a stake in one of Europe’s largest and most successful dairy businesses and play a positive role in its future development. Our farmers will benefit from Arla Foods amba’s long term strategic vision, global scale, broad product and customer base and proven track record in investing in the development and growth of leading dairy brands.
“We believe that the merger will provide the basis for improved returns for our Members and enable them to achieve long-term security and, after a transitional period, the same level of return as enjoyed by existing Arla Foods amba owners. It reflects and reinforces Milk Link’s current position as one of the UK’s leading dairy businesses; recognises and rewards the loyalty and commitment of our Members and will, we believe, provide their dairy farm enterprises with long term security, stability and sustainability.”
NOTES TO EDITORS
Merger will reinforce Arla Foods amba’s position as a top 10 global dairy business
Arla Foods amba is a co-operative currently owned by Danish, Swedish and German dairy farmers. A top 10 global dairy processing business it has production facilities in 13 countries and sales offices in a further 20. It employs more than 17,000 staff throughout the world and its products are sold under the established brands Arla®, Lurpak® and Castello® in more than 100 countries throughout the world.
Arla and Milk Link committed to UK leadership
Established in the year 2000, Milk Link is entirely owned by 1,600 British dairy farmers whose farm assured milk it processes into a comprehensive range of high quality and innovative dairy products. Milk Link is the UK’s largest producer of cheese, supplying all major food retailers, food processors and food service organisations. It also manufactures a wide range of dairy products including long life milk and cream, extended shelf life products, flavoured and functional milks and milk powders.
In its last financial year, Milk Link reported increased turnover of £628 million (+7.1%), employed circa 1,200 staff at eight well-invested dairy processing facilities and handled
1.5 billion litres of milk. It also completed its largest ever capital expenditure programme with the building of a new advanced whey processing facility at its Taw Valley Creamery in Devon, a state of the art soft cheese creamery at Trevarrian in Cornwall and started a major redevelopment of its Lockerbie Creamery in Scotland.
If the merger proposal is approved, then in the UK the new combined business will have:
Scale – strength and scale with a combined turnover of £2 billion
Well-invested processing assets nationwide - 15 cheese, fresh milk, long life milk and ingredients production and packing facilities
A substantial and complementary milk pool – totalling 3.2 billion litres (circa 24% of total UK production)
Established market positions in a balanced range of product sectors
Some of the UK’s leading butter, cheese and milk brands
Strong and complementary relationships with all the UK’s major retailers and leading foodservice businesses
Principles of the merger
If the proposed merger is approved then Milk Link Members will, through their continued membership of Milk Link, receive the equivalent membership rights in Arla Foods amba as their fellow dairy farmer owners. Milk Link will become a corporate member of Arla Foods amba and will change its name to Arla Milk Link. The relationship between Milk Link and Arla Foods amba will be perpetual for both parties.
To represent Milk Link Member interests and allow them to positively influence the growth and development of the co-operative, Arla Milk Link (the corporate member) will, on completion of the merger, be entitled to have two farmer elected directors on the Arla Foods amba Board of Directors and a further 10 representatives on the Arla Foods amba Board of Representatives.
Next Steps
Milk Link Members will receive a detailed information pack on the merger later this week and a series of roadshows will be held across the country to enable them to learn more about the proposals and the benefits of the merger. At the same time Arla Foods amba will be meeting with members of their Board of Representatives.
The proposed merger will require the approval of Milk Link Members and will therefore be subject to an all Member vote, which will be held on 26 June. The merger is also subject to a number of other conditions, including the approval of the Arla Foods amba Board of Representatives and relevant regulatory authorities.