EU dairy giant Arla Foods’s merger with cooperative Walhorn EGM has been approved by the boards of the two organisations.
The move was initially proposed about six weeks ago and adds Walhorn’s turnover of 239M euros (£195.5M) to Arla’s portfolio.
Walhorn expands Arla’s reach to include the Netherlands for the first time, as Walhorn is owned by a total of 795 farmers in that region, as well as in Belgium and Germany.
Through its members, Arla already had a presence in the UK, Sweden, Denmark, Germany, Belgium and Luxembourg. Following the merger, Arla will have 13,500 members.
“We are delighted to welcome the new dairy farmers to our group of owners,” said Åke Hantoft, chairman of Arla Foods. “Arla is a bigger business than Walhorn, but we have exactly the same desire to be part of a cooperative that enables us to grow and develop our farms.
“Some of Walhorn’s owners are already neighbours of Arla farmers, so in every way it feels like a natural step to merge with our colleagues at Walhorn.”
Arla’s CEO Peder Tuborgh is also delighted to welcome the new members: “We see this merger as a vote of confidence on the part of Walhorn’s dairy farmers and we are convinced that the merger will lead to a mutually beneficial partnership.”
‘Core of Arla’s business’
“At Arla, we have made a point in recent years of informing our members that they are the very core of Arla’s business foundation and that we are ready to buy all the milk they are able to produce – also when European milk quotas disappear. This message has been warmly received by Walhorn’s owners.”
The merger will mainly impact Arla’s access to raw milk in Germany and Belgium and the dairies in Pronsfeld, Germany and Nijkerk in the Netherlands.
The merger, which must now be approved by the national competition authorities, is expected to go ahead in the summer. “We are confident the competition authority will approve the merger,” a spokeswoman for the company told FoodManufacture.co.uk.
The deal was agreed by 94% of Arla’s board of representatives and 96% of Walhorn’s board of representatives.
In 2013, Arla’s worldwide sales of dairy products to customers and consumers totalled DKK 73.6bn (£8.4bn).