Arla Foods and EGM Walhorn plan to merge operations

Dairy cooperatives Arla Foods amba and Eupener Genossenschaftsmolkerei Walhorn (EGM Walhorn) have announced plans to merge their operations.

The proposed merger will allow Arla to pursue its growth strategy together with EGM Walhorn.

It will enable EGM Walhorn to continue its cooperative traditions as well as have its own representatives on the board of directors and representatives at Arla Foods.

In addition, the merger will provide EGM Walhorn members with an unlimited milk purchase guarantee at a price calculated on the same basis as other Arla members.

A proposal to members and the boards of representatives of both firms has been circulated, and a vote will be held in mid-May.

The merger requires approval from at least 75% of the representatives in each of the two cooperatives.

Subject to the receipt of member approval and regulatory approval, the transaction is expected to complete in July 2014.

Arla Foods chairman Åke Hantoft said that the Walhorn production site complements the company’s production sites in Pronsfeld, in Germany, and Nijkerk, in the Netherlands.

"In addition, 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," Hantoft added.

EGM Walhorn supervisory board chairman Mathieu Dobbelstein said, "In Arla, we would have a strong partner, strengthening our cooperative orientation and offering farmers a secure basis for future development."

With around 12,600 cooperative farmer members in Sweden, Denmark, Germany, Belgium, Luxembourg and the UK, Arla Foods operates production sites in 11 countries with sales branches in 34 countries.

EGM Walhorn has around 800 farmer members in Belgium, Germany and the Netherlands, and its dairy operations produce around 550 million kilograms of milk per year.

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Image: The proposed merger will allow Arla to pursue its growth strategy together with EGM Walhorn. Photo courtesy of Alessandro Paiva.