UK-based Express Dairies has said it has agreed to merge with rival Arla Foods UK in an all-share deal that would leave Arla’s parent company, Arla Foods amba, with 51% control of the merged business.

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The proposed merger is aimed at offsetting oversupply in the UK milk industry. The deal would see Express issuing 311 million new shares to Arla Foods amba, Europe’s largest dairy cooperative. Existing Express shareholders are to receive a special dividend on completion of the deal of 9.6 pence per share, reported Reuters.

The deal is expected to deliver annual pre-tax cost savings of over £20m (US$31.4m) by the end of the third year after completion.

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