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March 31, 2014

BELGIUM: Dairy co-ops Arla, EGM Walhorn propose merger

European dairy co-operatives Arla Foods and Eupener Genossenschaftsmolkerei Walhorn plan to merge their operations.

European dairy co-operatives Arla Foods and Eupener Genossenschaftsmolkerei Walhorn plan to merge their operations.

Belgium-based EMG Walhorn processes 550m kilograms of milk a year produced by its 800 farmer-owners in Belgium, Germany and the Netherlands. Arla is a co-op of 12,600 farmers that manufactures 12.7bn kilos of milk a year.

Arla hopes the deal will expand its milk pool as it works to drive growth in emerging markets, chairman Åke Hantoft said. The dairy giant hopes to double exports of European products to growth markets outside the EU by 2017.

Hantoft said: “This proposed merger will allow Arla to pursue its growth plans together with EGM Walhorn. We are confident EGM Walhorn is the right business with which to deliver our plans. The Walhorn production site complements our production sites in Pronsfeld, in Germany, and Nijkerk, in the Netherlands. In addition, 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 deal, if approved, would provide EGM Walhorn members with an “unlimited” milk purchase guarantee, with prices calculated on the same basis as Arla’s other members.

“For our co-operative, the proposed merger offers clear prospects of secure growth and greater profitability,” Mathieu Dobbelstein, chairman of EGM Walhorn, said.

Arla said the proposal will be voted on in May and it hopes to complete the merger by the end of July.

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