Arla and German dairy giant DMK announce plans to merge

Arla Foods and German dairy supplier DMK Group have announced plans to merge – creating Europe’s largest dairy co-operative.

The move, which is subject to approval from the boards of representatives of the two dairy giants, plus competition regulators, would create a joint co-operative with combined revenues of €19bn, sourcing milk from more than 12,000 farmer owners across Europe.

DMK, short for Deutsches Milchkontor, is Germany’s largest dairy co-op, with revenues of €5.1bn last year. Based in Lower Saxony, it owns brands ranging from Oldenburger, which sells milk and butter, to cheese brands Milram and Uniekaas, baby formula brand Humana and dessert brand Osterland.

The merger “represents a union of shared values and complementary strengths”, the pair said – building on previous co-operation and joint ventures between the two businesses, such as ArNoCo, which processes whey from DMK’s cheese production into whey protein concentrate and lactose for Arla’s global ingredients business.

“The co-operatives have united farmers for many generations, and the merged entity will shape the future of dairy for generations to come,” they added. “The combined entity will stand commercially strong and gain increased resilience through more diversified product portfolios and market positions despite the anticipated decline in the overall European milk pool.”

As Europe’s largest dairy co-operative, it was the pair’s “clear ambition to develop even stronger partnerships with customers, adding value to their business, while also offering an attractive environment for farmers, colleagues and other business partners”, they said.

“The joint co-operative will have a solid supply of milk in the coming years, ensuring the financial abilities to invest in the future of dairy.”

Arla Foods chair Jan Toft Nørgaard described the planned merger as a “win-win for our co-operatives”.

The strength of both Arla and DMK Group lay in “our shared commitment to quality and innovation, and I see DMK Group as the perfect partner in shaping a new and strengthened Arla, poised to lead in the dairy industry”, he added.

DMK Group was a “very attractive partner that shares our core values”, said Arla Foods CEO Peder Tuborgh.

“Our strong market positions and product portfolios complement each other very well and our strong partnership in recent years has proven that DMK Group is an ideal partner for Arla,” he added.

“Our joint market presence in Europe and globally will enable us to safeguard our production of healthy dairy products, ensuring stable food production in Europe, as well as bringing even more nutritious products to the world and our customers. This merger is a natural continuation of our strong collaboration to the benefit of consumers, our farmers and their milk price.”

The merged entity will carry the Arla name. It will be headquartered in Viby J in Denmark with Nørgaard continuing as chair. Tuborgh will be CEO, while DMK CEO Ingo Müller will step into the Arla executive management team as EVP of post-merger integration.