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Arla unveils proposed merger with Belgian coop EGM Walhorn

By Mark Astley+

31-Mar-2014

Arla Foods cooperative membership could be extended to the Netherlands "for the first time" through its proposed merger with Eupener Genossenschaftsmolkerei Walhorn (EGM Walhorn).

Through the merger, which is subject to member and regulatory approval, approximately 550m kilos of milk produced by EGM Walhorn’s 800 farmer members across Belgium, Germany and the Netherlands will be incorporated into Arla’s already substantial milk pool.

Arla Foods is owned by around 12,600 cooperative farmer members in Sweden, Denmark, Germany, Belgium, Luxembourg and the UK. 

The merger, if approved, will see Arla “for the first time have some members in the Netherlands,” said Arla Foods spokesman, Theis Brøgger.

"Profitable venture"

Milk produced by EGM Walhorn members is processed and marketed by Walhorn AG, a joint venture between the cooperative (49%) and French dairy giant Lactalis (51%).

Speaking with DairyReporter.com, Brøgger said that Arla plans to continue what it sees as a “profitable venture for both companies.”

“Our intention is to continue that, and take over the contractual rights and ownership of 49% of that joint venture,” said Brøgger.

The “majority” of the milk produced by EGM Walhorn members is currently supplied to its joint venture with Lactalis, said Brøgger.

Between 100m and 150m kilograms of spare milk will, however, be added to Arla’s existing milk, which in 2013 stood at 12.7bn kilograms.

“There are several benefits for both companies,” said Brøgger. “Arla would get access to more milk, which is a very valuable commodity at the moment.”

“Our exports to growth markets are growing. There are a lot of opportunities for us, and they all require raw milk.”

Member approval

Under the proposed merger, EGM Walhorn will meanwhile retain its cooperative status, and current suppliers will remain EGM Walhorn members.

It's farmer owners would also be given an unlimited milk purchase guarantee at a price calculated on the same basis as all other Arla members, and their own representatives on Arla's Board of Directors and Board of Representatives.

The Board of Representatives of EGM Walhorn and Arla Foods are scheduled to vote on the proposed merger in separate meetings on 13 and 14 May.

For the merger to be completed, approval by at least 75% of the representatives from each party is required.

Subject to this approval and the approval of relevant competition authorities, the merger should be sealed by the end of July.

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