CMA considering Müller’s acquisition proposal of Dairy Crest’s milk operations

The UK Competition and Markets Authority (CMA) is consulting on the proposed undertaking of Germany-based Muller UK & Ireland Group for the acquisition of Dairy Crest’s struggling milk operations for £80m.

Dairy Crest first revealed its plans of selling the loss-making entity in November last year.

The scope of the transaction will include the sale of Dairy Crest’s production plants at Foston, Chadwell Heath and Severnside, along with the Hanworth glass bottling site and 72 depots.

The company also plans to sell its fresh liquid milk, flavoured milk including the FRijj brand, bulk and potted cream, bulk butter, and milk powder businesses.

Dairy Crest CEO Mark Allen was quoted by the Telegraph as saying: "We have always believed the sale of our dairies operations is good news for the whole UK dairy sector, which is currently facing significant challenges arising from low dairy commodity returns.

"It will deliver economies of scale and cost efficiencies that will underpin investment and help the UK compete more successfully in global markets."

Müller, as part of its proposals to ensure that the dairy sector remains competitive post-sale, said it will negotiate with two dairy processors to enter into the toll processing agreement. These include Medina Holdings and Nijjar Group Holdings.

To address the concerns of CMA, Müller has proposed the processing of around 100 million litres of fresh milk annually on behalf of one smaller rival, reported the Telegraph.

However, CMA has said that before arriving on a decision, it will involve third parties in a consultation to listen to their views about Müller’s proposals.

The authority plans to close the consultation on 25 August.

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Image: Dairy Crest had first revealed its plans of selling its milk operations to Müller in November 2014. Photo: courtesy of Competition and Markets Authority / Crown Copyright.