Denmark’s Arla Foods and Germany’s DMK Group have announced plans to merge to create the “strongest dairy cooperative in Europe”.
The deal brings together more than 12,000 farmers, with the joint business having revenues of nearly €19bn (Arla: €13.8bn, DMK: €5.1bn).
The merged entity will operate under the Arla name, with its headquarters in Viby J, Denmark. Arla’s Jan Toft Nørgaard will remain as Chairman. Arla’s Chief Executive, Peder Tuborgh, will be CEO, and DMK Chief Executive Ingo Müller will step into the executive management team as EVP of post-merger integration.
The merger is subject to approval from the board of representatives in the two cooperatives, as well as regulatory clearance.
Arla and DMK have cooperated on several projects in recent years, including the joint venture project ArNoCo, which processes whey from DMK’s cheese production into whey protein concentrate and lactose for Arla’s global ingredients business.
“DMK Group is the largest dairy cooperative in Germany and a very attractive partner that shares our core values. Our strong market positions and product portfolios complement each other very well and our strong partnership in recent years has proven that DMK Group is an ideal partner for Arla,” said Tuborgh.
“Our joint market presence in Europe and globally will enable us to safeguard our production of healthy dairy products, ensuring stable food production in Europe, as well as bringing even more nutritious products to the world and our customers. This merger is a natural continuation of our strong collaboration to the benefit of consumers, our farmers and their milk price.”
Müller added: “Arla has established itself as a key player in the dairy industry, and by partnering up we will have a strong and attractive branded and private label product portfolio for all our customers. Through Arla’s global reach, we can access consumers and customers beyond our current geographical reach as well as strengthening our business resilience.
“Our complementary strengths, both in business and mindset, will enable us to keep advancing in dairy technology and innovation, while also providing a strong home for farmers.”
Arla Foods is owned by more than 7,600 farmers from Denmark, Sweden, the UK, Germany, Belgium, Luxembourg and the Netherlands. It owns dairy brands such Arla, Lurpak, Anchor, Puck and Castello.
Meanwhile, DMK Group is Germany’s largest dairy cooperative, with a product portfolio that includes cheese and other dairy products, as well as ingredients for baby food, ice cream, and vegan products. Its brands include MILRAM, Oldenburger, Uniekaas, Alete bewusst and Humana.
NAM Implications:
- Arla and DMK have not gone this far without sounding out the boards of representatives and the authorities.
- Therefore, rivals had best assume a go-ahead…
- …and conduct major reassessments of relative competitive appeal in most markets.
- Unless they prefer to waste time in ‘wait & see’ mode?
