Dairy giant Arla Foods is in talks to merge with German dairy co-operative Hansa-Milch, it emerged today (17 December).

Arla, the dairy processor owned by 7,200 farmers in Denmark and Sweden, has been eyeing the German market for months and revealed today that merger talks were underway.

Arla CEO Peder Tuborgh and chairman Ove Møberg said a deal would create a company that sold a wider portfolio of dairy products.

“Once we got to know Hansa-Milch it became clear that we are not only comparable as cooperatives, we also share the same ambition for the German market. Together we will be stronger and we will be able to offer consumers a broader range of products,” Møberg said.

Hansa Milch, based in northern Germany, is a co-op owned by around 1,000 members and producer of dairy products under the Hansano brand.

Arla has already outlined how a merged company would look. The new entity would have around 7,000 co-op members across Denmark, Sweden and Germany. It would have a board of representatives of 155 farmers from across the three countries, with the bulk coming from Denmark and Sweden. A board of 19 directors would be created, with only coming from Germany.

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Farmer-members from both companies will decide whether to give the green light to the merger by the end of March.

“Coming together with Arla Foods would represent the next logical step for the business and would benefit our members,” said Hansa-Milch chairman Uwe Krause.