Arla Foods and DMK Group have announced plan to merge, saying the move would create the largest dairy co-operative in Europe.
The merger brings together more than 12,000 farmers into a joint co-op that will achieve a combined pro forma revenue of €19bn (£16.3bn).
“With this move,” the co-ops said in a release, “we progress towards creating the future of dairy, enhancing nutritious, high-quality dairy production and innovation in Europe and globally, while securing a strong milk price for our owners.”
The merger is subject to approval from the board of representatives in the two co-ops – with votes dues on 17/18 June – as well as regulatory approval.
Arla and DMK say the merger represents “a union of shared values and complementary strengths”, adding: “The co-operatives have united farmers for many generations, and the merged entity will shape the future of dairy for generations to come. The joint co-operative will have a solid supply of milk in the coming years, ensuring the financial abilities to invest in the future of dairy.”
The co-ops have joined forces on several projects in recent years, including joint venture ArNoCo, which processes whey from DMK’s cheese production into high-quality whey protein concentrate and lactose for Arla’s global ingredients business.
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”I am immensely proud of this proposed merger, which is a win-win for our co-operatives,” said Arla chair Jan Toft Nørgaard. “The strength of both Arla and DMK Group lies in our shared commitment to quality and innovation, and I see DMK Group as the perfect partner in shaping a new and strengthened Arla, poised to lead in the dairy industry.“
DMK chair Heinz Korte added: “We are proud of the planned merger with Arla, a co-operative that shares our commitment to innovation and optimal value creation. This partnership strengthens the resilience of our co-operatives and significantly contributes to strengthening the competitiveness of our farmers. Together, we can expand our reach for our dairy products, thus improving our offering and jointly driving the further development of innovative products for the benefit of our members.”
Peder Tuborgh, CEO of Arla Foods, said: “DMK Group is the largest dairy co-operative 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.
“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.”
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Ingo Müller, CEO of DMK, 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.”
The co-ops hope the merger offer increased resilience through more diversified product portfolios and market positions despite the anticipated decline in the overall European milk pool. Their stated goal is “to develop even stronger partnerships with customers, adding value to their business, while also offering an attractive environment for farmers, colleagues and other business partners’.
The merged entity will carry the Arla name. Headquarters will be placed in Viby J in Denmark and Jan Toft Nørgaard will be chair. Peder Tuborgh will be CEO, and Ingo Müller will step into the Arla executive management team as EVP of post-merger integration.
The detailed merger proposal will be discussed with members of the co-operatives as well as relevant employee representatives and works councils in the coming months.
