The new cooperative will adopt the name Lakeland Dairies.
Discussions about a possible merger started last June and have reached a positive outcome where the boards of both societies are unanimously recommending shareholders vote in favor of the merger at special general meetings on October 23. Regulatory approval will also be required.
Lakeland Dairies and LacPatrick Dairies are neighboring societies and both operate on a cross border basis exporting the vast majority of their output to global markets.
Second largest Irish processor
The new cooperative said it will prioritize supporting dairy farming families on a long-term basis by maximizing market returns and paying a sustainable and competitive milk price in line with market conditions.
Owned and controlled by farmers, with more than 3,200 milk suppliers and a collective milk pool of 1.8bn liters, the new coop will be the second largest dairy processor on the island of Ireland. It will have a combined annual turnover in excess of €1bn ($1.15bn).
Andrew McConkey, chairman of LacPatrick Dairies said the LacPatrick board believes an amalgamation with Lakeland Dairies is the best thing for milk suppliers, shareholders and customers.
“It gives our farmers the necessary security to make long term business decisions and provides stability for continuing progress in dairy farming for the next generation,” McConkey said.
“With an enlarged milk pool and well-invested dairy processing sites on both sides of the border, the new cooperative will be a coop of scale working in the long-term best interests of dairy farmers, ensuring global market access and serving our valued customers with an even greater capability and an expanded range of high quality, value-added dairy products.”
Alo Duffy, chairman of Lakeland Dairies said, “This merger proposal is a once in a lifetime opportunity for both co-operatives to continue their strong progress in a very meaningful way. Both societies are committed to the long-term wellbeing and economic success of dairy farming, milk producers and rural communities.”
Michael Hanley, CEO of Lakeland Dairies, who will be appointed CEO of the new group, said, “I am confident that the best interests of the shareholders and milk producers of both societies will be best served through this merger. The economies of scale achievable by combining both societies will create a larger, more efficient, diversified, farmer controlled, global dairy food group with a broad portfolio of value-added products and brands.
“Both co-operatives have excellent facilities, technologies and resources with strong synergies across our milk processing footprint and in the markets we serve at home and abroad. We will be able to expand the potential of our overall portfolio of products, covering Food Ingredients, Foodservice and Consumer Foods.”
He said the business will have considerable potential to increase revenues and generate the cost savings necessary to ensure competitive milk prices for its dairy farmers in the future, and will continue to ensure market access to the UK, Europe and the world.
“The combined organization will have substantial cashflow to underpin the development of the business. All of these factors will enhance the value of the merged societies for the benefit of all shareholders and milk producers.”