Arla said it had signed a deal to buy family-owned Tholstrup Cheese, which is best known for its Castello and Saga cheese brands and has sales of DKK830m. No sum was disclosed.
The deal, if approved by competition watchdogs, will give Arla an important new inroad into increasingly competitive cheese markets across Europe and the US.
"Over the past five years, Arla Foods has invested several hundred million [Danish] kroner in increasing its production of cream cheese, mould cheese, feta and mozzarella for the international market," the group said.
It added it had recently also increased production of blue-mould cheese, and that Tholstup a natural progression of this strategy.
Tholstrup exports 82 per cent of its cheese, which includes largely creamed and blue cheese. Its main markets are Germany, Austria and Switzerland, although seven and 10 per cent of exports also go to the US and Sweden respectively.
The firm also owns a factory in the US, offering Arla the chance to improve its position in this important market.
Earlier this year, Arla took over the White Clover dairy in Wisconsin, which had been making havari and feta for Arla under licence since 1998. The group also bought out Canadian speciality cheese firm, National Cheese Company, in November 2004.
"Over the past 10 years, the speciality cheese market in the US has grown by eight per cent per year. For a number of years, Arla Foods has been pursuing a successful added value strategy in the US," the firm said in January this year.
The deal with Tholstrup also comes as competition intensifies across speciality cheese markets.
Leading French dairy group Lactalis recently bought out Italian speciality cheesemaker Galbani. The Italian firm made and exported a range of cheeses, including parmigiano reggiano, mozzarella and ricotta, under the Santa Lucia, Galbani and Bel Paese brands.
"The market for speciality cheese is dominated by brands and the major suppliers of speciality cheese are currently competing for buying brands that, like Castello and Saga, have the potential to maintain and expand their market share," said Arla in a statement.