Lakeland Dairies and LacPatrick Dairies have reached a merger agreement following the unanimous approval of both boards.
Discussions about a possible merger first began last June and the boards of the co-operative societies will recommend that shareholders to vote in favour of the merger at a Special General Meeting on October 23.
Regulatory approval will also be required.
The combined new co-operative will be the second largest dairy processor on the island of Ireland with a combined annual turnover in excess of €1bn, 3,200 milk suppliers and a collective milk pool of some 1.8bn litres.
The announcement was made jointly by the Chairman of LacPatrick Dairies, Andrew McConkey and the Chairman of Lakeland Dairies, Alo Duffy, together with Michael Hanley, CEO of Lakeland Dairies who will be appointed Group CEO of the new merged co-operative society which will adopt the name of Lakeland Dairies.
Andrew McConkey, Chairman of LacPatrick Dairies said, “The Board of LacPatrick firmly believes that an amalgamation with our neighbours in Lakeland Dairies is the best thing for our milk suppliers, shareholders and customers.
"It gives our farmers the necessary security to make long term business decisions and provides stability for continuing progress in dairy farming for the next generation," he said.
Alo Duffy, Chairman of Lakeland Dairies said, “This merger proposal is a once in a lifetime opportunity for both co-operatives to continue their strong progress in a very meaningful way.
"The proposed merger will uphold these values and will lead to further scale, strength and sustainability for milk producers. It will enable us to process all of the milk sent to us, including the expanding output of our dairy farming members.
Michael Hanley, CEO of Lakeland Dairies said, “I am confident that the best interests of the shareholders and milk producers of both societies will be best served through this merger.
"The economies of scale achievable by combining both societies will create a larger, more efficient, diversified, farmer controlled, global dairy food group with a broad portfolio of value-added products and brands.
"The business will have considerable potential to increase revenues and generate the cost savings necessary to ensure competitive milk prices for our dairy farmers in the future. It will continue to ensure market access to the United Kingdom, Europe and the world," he said.