Arla Foods plans huge merger with German DMK group

Two major European dairy co-operatives, Arla Foods and DMK group have announced merger plans, creating a milk pool of more than 12,000 farmers.

The joint co-operative would be the largest in Europe and likely to generate a revenue of about €19bn (£16.3bn) each year.

Denmark-based Arla Foods already works with more than 7,600 farmers across the UK and EU, processing roughly 13.7bn kg of milk a year.

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Meanwhile, Germany’s largest dairy co-operative DMK Group works with roughly 4,600 dairy enterprises in Europe and processes around 5.3bn kg of milk annually.

A final decision on the merger is expected in mid-June, pending approval by the board.

If given the go-ahead, the merged company will be based in Denmark, carry the Arla name, and be chaired by Arla’s Jan Toft Nørgaard.

Arla Foods chief executive Peder Tuborgh said: “Our joint market presence in Europe and globally will enable us to safeguard our production of healthy dairy products, ensuring stable food production in Europe, as well as bringing even more nutritious products to the world and our customers.

“This merger is a natural continuation of our strong collaboration to the benefit of consumers, our farmers and their milk price.”

Heinz Korte, chair of DMK Group, added: “This partnership strengthens the resilience of our co-operatives and significantly contributes to strengthening the competitiveness of our farmers.

“Together, we can expand our reach for our dairy products, thus improving our offering and jointly driving the further development of innovative products for the benefit of our members.”

The plans are likely to attract the attention of European competition watchdogs.