Denmark's Arla Foods, Germany's Hansa-Milch in merging talks; dairy cooperatives to decide on deal in February-March

Graziela Medina Shepnick

VIBY, Denmark , December 17, 2010 (press release) – The Scandinavian company Arla Foods amba and the Northern Germany-based Hansa-Milch eG are considering merging. Representatives of the two dairy cooperatives are already engaged in talks. A decision by the cooperative members as to whether the merger is to come about will be taken in February-March 2011.

Two cooperatives with complementary product ranges
Arla Foods amba is a cooperative organisation owned by 7,200 farmers in Denmark and Sweden. Arla’s aim is to make natural milk-based products available to consumers. The Scandinavian dairy company is internationally successful and is known in Germany for its specialty cheeses Arla Buko®, Castello® and Arla Höhlenkäse®, for Arla Kærgården® and Lurpak® butter.

“Together with Hansa-Milch, we would be able to offer a complete portfolio of dairy products from one single supplier, which will enable us to become an even more attractive partner to the German retail trade,” explains Peder Tuborgh, CEO, Arla Foods amba.

“Once we got to know Hansa-Milch it became clear that we are not only comparable as cooperatives, we also share the same ambition for the German market. Together we will be stronger and we will be able to offer consumers a broader range of products,” says Ove Møberg, Chairman of Arla Foods amba.

Hansa-Milch has long been a key player in the market in Northern Germany, in particular, where its Hansano brand makes it one of the most important providers of fresh dairy products, including  milk, cream and quark from the region. For Hansa-Milch eG, Arla represents a strong international partner with an excellent track record in innovation and with significant commercial acumen.

“Coming together with Arla Foods would represent the next logical step for the business and would benefit our members,” says Uwe Krause, Board Chairman at Hansa-Milch eG, which is owned by around 1000 dairy farmers in Schleswig-Holstein and Mecklenburg-Vorpommern.

It is a key element of the Arla Foods strategy to pay members as high a price as possible for their milk. In order to achieve this objective, Arla needs to grow its business further within Europe, and particularly in the important German market. Arla would be able to expand its presence in Germany through a merger with Hansa-Milch eG.

Similar calculation for milk price and purchase guarantee
As part of a merger between the two cooperatives, the farmers who are members of Hansa-Milch eG are set to receive a milk purchase guarantee with no time restriction. In addition, Arla will assure Hansa-Milch eG of a milk payment price calculated on the same basis as its own members. In previous years, the milk price for the Scandinavian cooperative has been generally higher than that achieved by Hansa-Milch.

Cooperative owners to vote
As cooperative companies, key decisions, such as a possible merger, are made through the democratic involvement of the members. Hansa-Milch eG members and Arla Foods’ Board of Representatives intend to vote on the issue in February-March.

A possible merger is subject to approval by the European Competition Authorities.

About Hansa-Milch

‘From the region, for the region’ – that’s the Hansa-Milch message. The company has approx. 400 employees and is owned by around 1000 cooperative members, of which 670 are active milk farmers; every year, it processes around 700 million kilogrammes of milk at its site in Upahl, in western Mecklenburg. The emphasis at Hansa-Milch is on careful processing procedures for natural products, and on a sustainable approach to use of resources.

About Arla Foods

Arla Foods amba is the fourth largest dairy cooperative in the world. The foundations of the cooperative were laid over 100 years ago, and in 2000 the Swedish Arla Group and the Danish company MD Foods merged. At the start of 2010, Arla with its headquarters in the Danish city of Aarhus had a total of 7,625 Danish and Swedish farmers as cooperative owners. Arla has processing facilities in 13 countries and employs approx. 16,200 employees. Its products are marketed in over 100 countries and Arla is the biggest supplier of organic milk in the world.

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