Arla Foods divests British milk drinks business Crediton Dairy

Swedish-Danish dairy co-operative Arla Foods has divested its British milk drinks business Crediton Dairy to the management buy-out team led by former Milk Link executives Neil Kennedy and Tim Smiddy, for an undisclosed amount.

This development comes after the European Commission (EC) granted approval for the deal.

Crediton Dairy is a supplier of British long life milk, long life cream, functional and flavoured dairy drinks and fresh bulk cream.

The dairy, which has a current production capacity of 200 million litres, supplies to all of the UK’s major retailers and leading food service businesses with both customer label and branded products.

The company’s branded products include Moo, the leading brand of long life milk in the UK; Flora pro activ functional branded milks; flavoured milk brands such as Mars Family Refuel chocolate milk made under a licence from Mars; and the Dairy Pride long life milk and cream foodservice brand.

Neil Kennedy, the former chief executive of Milk Link, has been appointed chairman of Crediton Dairy, while former group finance director Tim Smiddy has become the managing director.

Tim Smiddy said that the EC approval and completion of the acquisition enables the company to progress its plans for the development of the business.

"We believe that Crediton has strong growth potential based upon its self-contained, well invested manufacturing facility; growing customer base; established range of products and brands; and skilled and committed workforce," Smiddy added.

"Moving forward we will continue to focus on making great tasting, high quality products with demonstrable British provenance and traceability and complement this with customer service excellence, category insight and targeted new product development."

In September 2012, Arla Foods received approval from the EC to acquire Milk Link; however, the Commission’s approval was conditional upon the divestment of Milk Link’s long-life milk processing facility in Devon, UK.

At the time of the approval, the EC had concerns that the transaction would have significantly reduced competition on the UK market for long-life milk by merging the two leading suppliers of the product in the country.

In response, Arla Foods offered to divest Milk Link’s long-life milk and dairy drinks business, including the transfer of brands and the production facilities, at Crediton, Devon, UK.

Arla Foods, which is owned by 12,000 farmers from Denmark, Sweden, the UK, Germany, Belgium and Luxemburg, is an international dairy company producing a wide range of dairy products under brands such as Lurpak and Castello.

Milk Link, a British farmers owned co-operative, is engaged in the production and marketing of cheeses, long-life standard milk, extended shelf life flavoured dairy drinks and packet butter.

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Image: The divestment of Crediton Dairy by Arla Foods comes after the European Commission granted approval for the deal. Photo courtesy of Crediton Dairy Limited.