Two European dairy co-operatives announce plan to merge operations

Two multinational European dairy co-ops plan to merge by the end of July.

Both Eupener Genossenschaftsmolkerei (EGM) Walhorn, and Arla Foods Amba, are owned by farmers across numerous European countries.

This merger is part of their members’ post-milk quota growth plans.

The respective boards of directors have circulated a proposal to their members and the boards of representatives of both companies, who are expected to vote on the proposal in mid-May.

The merger with Arla would result in EGM Walhorn members being given an unlimited milk purchase guarantee at a price calculated on the same basis as all other Arla members.

If the merger is approved by both boards and by competition authorities, it is set to complete at the end of July, they said.

“EGM Walhorn would provide us with an opportunity to grow our milk pool across Europe and the merger would be an important step towards achieving our strategic ambitions, which are focused on growth,” said Aake Hantoft, chairman of Arla Foods.

Arla, which is owned by around 12,600 farmers in Sweden, Denmark, Germany, Belgium, Luxembourg and the UK, is the world’s sixth largest dairy company and processed a total of 12.7bn kilos of milk in 2013.

Arla gets three quarters of its sales in Europe, with its biggest rivals including Nestlé, Danone and Lactalis.

EGM Walhorn is owned by around 800 co-operative farmers in Belgium, Germany and the Netherlands, and produces around 550m kilograms of milk per year.

Mr Hantoft said that EMG Walhorn’s production site complements Arla’s production sites in Pronsfeld, in Germany, and Nijkerk, in the Netherlands.

EGM Walhorn’s chairman, Mathieu Dobbelstein, said: “For our co-operative, the proposed merger offers clear prospects of secure growth and greater profitability.

“In Arla, we would have a strong partner, strengthening our co-operative orientation and offering farmers a secure basis for future development.”