Arla confident despite Allgäuland takeover setback

By Ben Bouckley

- Last updated on GMT

Related tags Arla Denmark

Arla Foods remains confident that its ‘take it or leave it’ takeover bid for Southern German dairy co-op Allgäuland-Käsereien will succeed, despite its initial rejection.

An Arla spokesman told that one of the six co-operatives that comprise Allgäuland-Käsereien last week rejected what he said was a compelling bid.

The Danish-Swedish co-operative launched its offer – which is supported by Allgäuland’s board – in July, to increase its footprint within the German market.

Arla wished to acquire the €253m turnover company for the “important potential”​ it sees within its speciality cheese business, both in Germany and abroad.

The spokesman said that five of the six co-operatives voted by a 98-99% margin in favour of the takeover, but the sixth had rejected it.

He explained that only 69% of those who voted were in favour, with a majority of 75% necessary for acceptance.

Revised vote

But he added that Allgäuland management had informed Arla that internal “discussion and debate”​ around the bid meant that a revised vote would now be held on September 12.

“I hope then we’ll be able to issue a final clarification as to what has happened,”​ he said, adding that Arla was confident it could achieve a positive outcome.

Confirming that Arla would not put forward a revised offer for Allgäuland, he said: “We’ve put forward a bid for the entire company, we believe it will bring value to the company.”

Asked about rumours that some farmers within Allgäuland’s sixth co-operative had signed contracts with rival dairies, and thus might have a vested interest in blocking any takeover, he said Arla believed this could be the case.

He suggested that “non-active”​ farmers within the sixth co-operative might also have voted against the bid in the first instance.

German market moves

Allgäuland-Käsereien was unavailable for comment, although the company reportedly said late last week that rival contracts would not affect any potential sale.

Germany is Arla’s fourth largest market (behind Sweden, Denmark and the UK respectively) with a DKK 2.1bn (€281.9m) turnover.

Earlier this year, Arla merged with dairy co-operative Hansa-Milch in a significant move that saw it gain access to German milk producers serving 80m consumers.

Announcing its half-year (H1) results on September 1, Arla said the move marked the “first stage in the significant development of Arla’s activities in the German market,”​ with the Allgäuland bid a further step.

Arla reported revenues of DKK 27bn (€3.62bn) for the first half of 2011 (H1), as against DKK 24bn (€3.22bn) in 2010.

However, profits fell to DKK497m (€66.7m) for the first half year, compared with DKK697m (€93.56m) last year.

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