EU approves Arla mergers with Milk Link, Milch-Union Hocheifel

EU approves Arla mergers with Milk Link, Milch-Union Hocheifel

Mergers create the number-one dairy company in the UK and third-largest in Germany.

ArIa Foods amba and Milk Link are pleased to be able to confirm that regulatory approval has been granted by the European Commission to merge. The Commission’s approval means that the merger will complete Oct. 1, enabling the formation of the UK’s number-one dairy company.

The approval of the merger has been given subject to Arla implementing a remedy to address the Commission’s concerns relating to a perceived reduction of competition in the UK long life milk market.

As such, in order to restore effective competition, Arla has committed to divest Milk Link’s milk drinks business at Crediton on a viable and separate, standalone basis. This business includes Crediton dairy, which produces all of Milk Link's long life milk, long life cream, extended shelf life milk and flavored dairy drinks and fresh bulk cream.

The milk drinks business will be sold to a purchaser on terms approved by the Commission. As such, from now the existing milk drinks business will be ring fenced from the rest of the merged business and as part of its commitment to the Commission, Arla has undertaken to preserve the economic viability, marketability and competitiveness of the business. This includes making resources available for the development of the business, in line with our existing business plans, and the retention of a dedicated senior level management team to lead the business.

Arla Foods UK’s long life milk business, based at its Settle creamery, will not be affected by the remedy and will retain an established market position in long life and flavoured milk.

Milch-Union Hocheifel merger
The merger between German Milch-Union Hocheifel (MUH) and Arla Foods has also been approved by the EU competition authorities. The merger is set to take effect Oct. 1.

With the approval in place Arla is just days away from welcoming new cooperative owners in Germany, Belgium and Luxembourg, where MUH’s current cooperative owners are based.

Arla’s executive vice president and director of the company’s operations in Germany, Tim Ørting Jørgensen, is delighted the merger has been approved as it will significantly increase Arla’s activities in the German market. “This is a big day in the company history of both Arla and MUH. This merger will provide Arla with new opportunities on the German market not only in terms of an increased supply of raw milk and access to a strong product portfolio, but it also creates a platform for increased export to growth markets like China. We are prepared to begin the integration process and look forward to generating the greatest possible value from the new joint business,” says Tim Ørting Jørgensen.

MUH is Germany’s eighth-largest dairy company, specializing in production of so-called long life milk (milk with extended shelf life) and fresh liquid milk in the town of Pronsfeld, southwest of Cologne near the border of Belgium and Luxembourg. MUH employs approximately 800 people and has approximately 2700 cooperative owners who, like Arla’s owners, are dairy farmers. In 2011 the company generated a revenue of approximately 680 million Euro, of which approximately 40 percent came from exports.

Arla has a long history in Germany with well-known brands including Arla Buko and Arla Kærgården, both of which are delivering rapid growth. The merger between MUH and Arla creates the third-largest dairy company in Germany, which will be called Arla Foods Deutschland.


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