The CMA refers the sale of Dairy Crest’s dairy operations to Müller for a Phase II investigation

Müller has provided an update on its proposed acquisition of Dairy Crest’s dairy operations.

In November 2014, the Company confirmed that it had agreed to acquire Dairy Crest’s processing, trading and distribution activities relating to liquid milk, packaged cream, flavoured milk and bulk commodity ingredients subject to approval by the relevant competition authorities and the shareholders of Dairy Crest.

The proposed acquisition includes Dairy Crest’s dairy facilities at Severnside, Chadwell Heath, Foston and Hanworth together with around 70 depots.

The Competition and Markets Authority (CMA) has now announced that it is referring Müller UK & Ireland’s proposed acquisition of Dairy Crest’s processing, trading and distribution activities relating to liquid milk, packaged cream, flavoured milk and bulk commodity ingredients, to a Phase II assessment.

During the Phase II assessment, the CMA will continue to investigate plans for the proposed acquisition before making a final decision. 

This is an expected development given the scale of the acquisition and will take approximately 6 months to complete.

The acquisition of Dairy Crest’s dairy operations will increase Müller’s competitiveness

Ronald Kers, Chief Executive of Müller Group, said, “It was our expectation that the CMA might wish to examine our proposed acquisition in detail and we look forward to working with them to supply the information required and to achieving a positive outcome.

“The rationale for this transaction is perhaps even stronger now given the mounting challenges facing the UK fresh milk sector and we remain convinced of the need to increase our competitiveness, ensuring that customers continue to receive a quality product at a low price, whilst continuing to pay farmers fairly.

“We can achieve this by bringing Müller Wiseman Dairies and Dairy Crest’s dairy operation together leading to better efficiencies. This will give us the means to unlock higher levels of investment, category insight and product development, which is badly needed in the fresh milk aisle.”

Mark Allen, Chief Executive of Dairy Crest, commented, “We always anticipated that the sale would be referred to phase II. We remain convinced that this is a great deal for our customers and farmers which will help create a more sustainable UK dairy sector at a time when it faces significant challenges. We remain confident of receiving approval at the end of phase II.”

Müller believes that combining Müller Wiseman Dairies and Dairy Crest’s dairies operations will benefit customers, consumers and employees of both businesses whilst offering supplying farmers greater opportunity and security.  

The businesses have largely complementary footprints and bringing the two dairy operations together will enhance the merged business’s ability to compete.

The combined business will also provide a platform for higher investment in production efficiencies which will unlock the potential for substantially higher levels of innovation, product development and exports of dairy products made in Britain.