Arla Foods merges with Milk Link, MUH

Danish dairy cooperative ArIa Foods has merged with UK cooperative Milk Link and German cooperative Milch-Union Hocheifel (MUH), following approvals from the European Commission.

The merged business between Arla and Milk Link is called Arla Foods UK, while that with MUH is called Arla Foods Deutschland.

Arla is a dairy cooperative owned by Danish, Swedish and German dairy farmers. Its core markets include Scandinavia, Germany and the UK.

Arla Foods UK is expected to process over three billion litres of milk annually.

The merger with Milk Link is, however, subject to Arla implementing a solution to address the Commission’s concerns over monopoly in the UK long life milk market.

In order to restore competition in the UK dairy market, Arla has made a commitment to sell Milk Link’s milk drinks business at Crediton to a purchaser on terms approved by the European Commission.

The Crediton dairy processes all of Milk Link’s long life milk, long life cream, extended shelf life milk and flavoured dairy drinks and fresh bulk cream.

Arla Foods UK’s long life milk business, which is based at its Settle creamery, will not be affected by this commitment.

The merger with MUH is expected to significantly increase Arla’s activities in the German market as it is considered to be the eighth-largest dairy company in the country.

Arla’s executive vice president and director of the company’s operations in Germany, Tim Ørting Jørgensen, said the merger will provide Arla with new opportunities in the German market not only in terms of an increased supply of raw milk and access to a strong product portfolio, but also as a platform for increased export to growth markets such as China.

MUH produces long life milk and fresh liquid milk at Pronsfeld, southwest of Cologne near the border of Belgium and Luxembourg.

The cooperative employs about 800 people and has approximately 2,700 owners who are based in Germany, Belgium and Luxembourg.

In 2011, the German dairy cooperative generated revenue of approximately €680m, of which approximately 40% was contributed by exports.

Arla submitted the merger applications to the EU Commission for approval in August 2012.

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Image: Arla’s merger with MUH and Milk Link is expected to significantly increase its activities in the German and UK markets. Photo courtesy of Arla Foods.