Wiseman bid opens UK market for Euro takeovers

The German firm saw a bid of £279.5M accepted by Wiseman on Monday (January 16), with experts now predicting that Dairy Crest could be the next acquisition target.

Clive Black, analyst at Shore Capital, told FoodManufacture.co.uk: “Müller’s bid for Wiseman is quite a specific topic but for some time we have felt that the agricultural side of the dairy system would have a big involvement in the ownership of the processing end. This will involve more European players coming to the UK.”​

“It is not beyond doubt that, in due course, although not necessarily tomorrow, that Dairy Crest could attract interest from [farmer] cooperative organisations and European brand players​.”

In 2007 Scandinavian firm Arla Foods merged with Express Dairies to create Arla Food UK, which has become the leading supplier of dairy products in Britain. This, combined with Müller’s bid for Wiseman, showed foreign takeovers could be a sign of things to come, according to Black.

One unnamed analyst echoed Black’s prediction and said that a move for one of the big three UK liquid milk giants, Arla, Dairy Crest and Wiseman, had been a possibility prior to the Müller bid.

Kick start​

He told Foodmanufacture.co.uk: “I do not think the market was ever closed in that respect. I think the bid for Wiseman happened because it was a reasonable price. But it is difficult to say whether this will immediately kick start more bids for UK firms​.”

“Back in 2005 French firm Lactalis was reported to be interested in Dairy Crest. I don’t think anything has changed with the Wiseman deal. But Dairy Crest is definitely an option and it is not unthinkable that they could be a target.”​

This opinion was not shared elsewhere in the city however, with some experts questioning whether the UK liquid milk market would be an attractive option for foreign firms.

One analyst told FoodManufacture.co.uk that the UK dairy market was in a “cyclical low​” and, while it was unlikely to get worse, it was also not showing any signs of recovering “anytime soon".​

This was attributed to many firms inability to pass on rising input costs to retailers.

“Why would a European firm be interested in entering the UK if they can’t see any growth.​” the analyst added

Arla Foods​

Meanwhile, dairy giant Arla Foods is set to establish its first production site in Russia after signing an agreement with the country’s third-largest dairy concern Molvest Group.

The deal is subject to regulatory approval however. But Arla said the prospective deal matched its ambition to become one of the leading dairy firms in the yellow cheese market.

Arla Ceo, Peder Tuborgh, told our sister publication FoodNavigator.com: “This is unlikely to be our final expansion into the Russian market, but this agreement alone is expected to double our turnover before the end of 2015.”