The proposal, which is subject to approval by Milk Link co-operative members, the Arla Foods board and regulatory authorities, will create a UK dairy business with a combined turnover of more than £2bn.
If the merger is approved, the combined UK business will boast 15 cheese, fresh milk, long life milk and ingredients production and packing facilities and will produce 3.2bn litres of milk each year – around 24% of total UK production.
Arla told DairyReporter.com that if approved, the merger will not affect any of Milk Link’s eight plants or its 1,200 employees.
“The merger is part of our growth ambition, both in the UK and globally. It is part of an effort to increase our presence in core markets, of which the UK is one,” Arla UK’s Nicola Hedge told DairyReporter.com.
“This gives us a more mainstream as well as speciality cheese offering and obviously a larger business.”
“Milk Link will become a member of the European Dairy Cooperative, and will in turn be taking a share of the cooperative,” said Hedge.
If approved, the merger will see Milk Link's 1,600 members enter the cooperative, which is currently owned by Danish, Swedish and German dairy farmers.
“If the proposal is approved, the cooperative will also be owned by Milk Link’s British dairy farmers, it is a positive move for them,” she said.
Arla currently has no plans to end production at any Milk Link facilities, which currently employ around 1,200 staff at eight plants, added Hedge.
“The two businesses complement each other very well.”
Milk Link produces cheese as well as a wide range of dairy products including long life milk and cream, whereas, Arla’s UK focus is on fresh liquid milk, cream and dairy products.
“So there really isn’t an overlap. At the moment there are no plans to close any part of the Milk Link business because they are very complimentary.”
The proposed merger will require the approval of Milk Link members and will be subject to a member vote, which has been scheduled for 26 June 2012.
It will also require the approval of the Arla Foods board of representatives and the relevant regulatory authorities.
The proposed merger will build on the firms’ current working relationship, which includes their Westbury Dairies Ltd joint venture, shared facilities in Lockerbie and Milk Link’s sale of raw milk to Arla.