European dairy cooperative Arla Foods plans to sell its cheese production plant in Sonthofen, Germany, to its peer Allgäuer Hof-Milch.  

A letter of intent has been signed by both parties with the transaction set to be completed by 1 May, according to a statement from Arla today (28 March).

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Arla said its decision was based on the fact the speciality cheese site at Sonthofen no longer fits with its ”strategic orientation” in Germany and Europe.

Under the proposal, 61 of the 84 employees at the facility will be given work at Allgäuer Hof-Milch, while Arla will seek to find jobs for the remaining 23 administrative positions at the site with the German firm or with Arla in Germany.

Meanwhile, Arla expects to continue to supply milk to the facility given its supply contract with local farmers does not expire until the end of 2019. Also, it is planned that Allgäuer Hof-Milch will continue to produce cheese products for Arla until further notice, so that Arla can comply with the current contracts with its retail customers. 

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Peter Giørtz-Carlsen, Arla’s executive vice president for Europe, said: ”All of our production sites in Germany are focused on supplying both the German market and our export markets, playing a crucial role in our delivery of the Arla Group strategy, Good Growth 2020. However, since the site in Sonthofen no longer corresponds with our overall strategic aim, we are pleased to have found a suitable buyer to continue its production and legacy.” 

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Arla’s other facility in the Allgäu region, based at Bad Wörishofen, is not affected by the decision.