Arla Foods concludes merger agreement with Express Dairies of the UK
The boards of Arla Foods amba and the UK dairy company Express Dairies plc have agreed the conditions for a merger between Arla Foods’ UK subsidiary, Arla Foods plc, and Express Dairies plc.
The merger between the two dairy companies will create the UK’s leading supplier of dairy products under the name Arla Foods UK plc. The new company will be the largest supplier of milk and an extensive range of added value dairy products to the UK multiples, which account for an increasing share of sales of dairy products in the UK.
The agreement between the two companies means that Arla Foods amba will hold 51% of the shares in Arla Foods UK plc, which will be listed on the London Stock Exchange. The remaining 49% of the shares will be held by the current shareholders of Express Dairies plc. Arla Foods amba has pledged not to increase its stake in the new company for the next two years.
Together, Arla Foods plc and Express Dairies plc’s combined turnover will total approx. DKK 15 billion per year, process 2.3 billion litres milk per year and employ a workforce of 7,000.
In recent years, the UK dairy industry has suffered from over capacity. At the same time, increasing numbers of consumers are buying their milk from supermarkets instead of via the traditional doorstep sales. It is the view of both companies that the merger will address trends in the UK market and that by combining the two companies’ milk businesses, significant synergies will accrue. The merger will also provide a platform for the further growth of Arla Foods plc’s added value dairy products.
“Our focus is centered around customers and consumers. Arla Foods amba’s strategy is based on this approach and entails plans for growth, underpinned by continuous large investments in the Groups marketing and manufacturing platform,” says Jens Bigum, Group Managing Director, Arla Foods amba. “In the UK dairy industry we support the view that further rationalisation is needed in order to meet a challenging future and preferably with dairy farmers and processors getting closer. A combination of Express Dairies plc and Arla Foods UK as proposed is the strongest possible response to the challenges ahead and in line with our long term thinking.”
“Our proposed Merger with the UK subsidiary of Europe’s largest dairy co-operative will combine two businesses with complementary operations and philosophies,” says Sir David Naish, Chairman of Express Dairies plc. “Together we will form a substantially stronger Group with a broad product portfolio, strong brands and the necessary management and financial resources to develop our operations for the future benefit of all our stakeholders, including shareholders, milk producers, employees, customers and consumers.”
The management of Arla Foods UK plc will consist of:
Board of Directors: Sir David Naish (Chairman), Jens Bigum, Peter Cawdron, Sir Richard Packer, Gordon Summerfield, Åke Modig, Kim Nielsen
Management Board, Neil Davidson (CEO), Mikael Sternberg Christiansen, Nigel David Peet, Tim Smith, Hanne Søndergaard.
The merger is conditional upon approval by the EU’s competition authorities and on the outcome of a general meeting of Express Dairies plc on 24 April, 2003.
Arla Foods amba and Express Dairies plc will host a press conference on the merger at 1 pm Danish time in Copenhagen and London. Neither company will be available for comment until then.