Dutch dairy products company Campina and Denmark-based rival Arla Foods are to merge to create what they claim will be the world’s largest farmer-owned dairy company.

The new company, which is to be called Campina Arla, will have turnover of approximately €10bn (US$13.3bn), around 28,000 employees and about 21,000 member-farmers, who will own the cooperative company.

Campina Arla will be headquartered in Copenhagen, Denmark (main office) and Zaltbommel, the Netherlands. The company will be split into four groups: Consumer Products Nordic, Consumer Products Europe, Cheese & Butter, and Ingredients.

Knud Erik Jensen, currently chairman of the supervisory board of Arla Foods, will be appointed chairman of the supervisory Board of Campina Arla, while Justinus Sanders, currently chairman of the executive board of Campina, will become CEO of the new company. Åke Modig, chairman of Arla Foods, will be appointed vice CEO of Campina Arla, while Kees Wantenaar, chairman of Campina, will become vice chairman of the new supervisory board.

Arla said the merger will create significant business benefits, including cost synergies such as increasing procurement scale and production effectiveness, as well as lowering administrative costs.

“The new company’s key strategic principles, product categories and markets still have to be worked out in detail. But basically they will be based on the core activities of both partners: consumer products and ingredients,” Arla said.

Arla said the two companies are a good fit because they focus on similar product categories but have achieved market positions in complementary markets.

In liquid milk, yoghurts and desserts Arla Foods focuses on Scandinavia and the UK, while Campina focuses on the Benelux countries, Germany, Greece, and Russia. In cheese and butter, Scandinavia and the UK are home markets for Arla Foods, with Campina’s home markets in the Benelux and Germany. In drinks, desserts and creams, as well as cheese and butter, both partners have expanded outside Europe and intend to grow further in these markets. Both companies also operate in the market for dairy-based ingredients for the food and pharmaceutical industries.