The board of Arla Foods UK has agreed a takeover offer from 51% stakeholder Arla amba, in a deal worth GBP212.9m (US$420.8m).

Arla amba is ready to pay 71 pence per share in cash to acquire the remaining 49% stake in the UK dairy group, through its subsidiary Arla Holding.

The acquisition price values the entire existing issued share capital of Arla Foods UK at GBP434.5m, the companies said today (22 January).

Arla amba chief executive Peder Tuborgh said: "Outright ownership will ensure that the business of Arla Foods UK derives the full benefits of being part of the largest dairy business in Europe and will enable us to strengthen the relationship with UK dairy farmers.

"At the same time, Arla amba's global strategy will significantly benefit from the full integration of its UK subsidiary into the Arla amba Group."

The Danish group's offer represents a premium of 22.4% to the Arla Foods UK share price before discussions were announced on 20 October 2006. 

Arla Foods UK chairman Sir David Naish said: "Since the merger creating Arla Foods UK in 2003, the business has been transformed into a leading British dairy company. We have established strong relationships with our major retail customers and our farmer suppliers. At the same time we have also created a significant increase in shareholder value.

"The independent directors consider that this offer from Arla amba represents fair value for shareholders and will allow Arla Foods UK to continue its development for the benefit of its staff, customers and suppliers."