Merger proposals have been sent to members of both co-ops, ahead of a vote on the proposal in mid-May.
Chairman of Arla Foods Åke Hantoft said the merger will fuel Arla’s growth. “We are confident that EGM Walhorn is the right business with which to deliver our plans,” said Hantoft. “EGM Walhorn would provide us with an opportunity to grow our milk pool across Europe and the merger would be an important step towards achieving our strategic ambitions, which are focused on growth.”
The Belgian co-op’s production site complements Arla’s production sites in Pronsfeld, in Germany, and Nijkerk, in the Netherlands, said the firm.
Mathieu Dobbelstein, chairman of the supervisory board at EGM Walhorn, said: “For our cooperative, the proposed merger offers clear prospects of secure growth and greater profitability,” he said. “In Arla, we would have a strong partner, strengthening our cooperative orientation and offering farmers a secure basis for future development.”
Both co-ops are owned by farmers throughout Europe. Arla Foods has about 12,600 farmer members in the UK, Sweden, Denmark, Germany, Belgium and Luxembourg.
EGM Walhorn’s 800 members are located in Belgium, Germany, and the Netherlands. The Belgian co-op produces about 550M kg of milk per year. Arla processed 12.7bn kgs of milk last year.
Under the merger proposals, EGM Walhorn members would receive an unlimited milk purchase guarantee at a price calculated on the same basis as all other Arla members.
Retain its cooperative status
If the plans go ahead, EGM Walhorn will retain its cooperative status, while joining forces with Arla Foods amba. EGM Walhorn members will remain members of the co-operative, with no change to their rights. The Belgian co-op will also have on Arla Foods’ board of directors and on the board of representatives.
Subject to approval, completion for the merger is expected to be July 2014. For the merger to go ahead, approval by at least 75% of the representatives in each co-op is needed.
Arla products are marketed in more than 100 countries, under brand names such as Arla, Lurpak and Castello. It runs production sites in 11, and sales branches in 34 countries.
Meanwhile, EGM Walhorn (an abbreviation of Eupener Genossenschaftsmolkerei Walhorn) was founded in 1933 and has its head office in Walhorn, near Eupen in Belgium. Last year the co-op achieved revenue of 239M euro.
Its milk is processed and marketed by Walhorn AG, a joint venture with the French Lactalis Group.