Members vote in favour: Hansa-Milch and Arla Foods to merge

Hansa-Milch Mecklenburg-Holstein eG and the Scandinavian company Arla Foods amba are set to merge.

A plan to that effect put forward by the boards of the two companies was approved by the members of the two cooperatives on March 2nd. The decision is being implemented with retrospective effect for the full 2011 financial year, and is enacted for January 1st 2011.

Democratic structures preserved

Hansa-Milch Mecklenburg-Holstein eG will be known as Hansa Arla Milch eG from now on. It remains a cooperative entity with its own members, and joins Arla Foods amba in that capacity. This means that the democratic structures are still preserved under the new entity of Hansa Arla Milch eG. In addition, the northern German dairy cooperative will have its own representatives on the boards and committees at Arla Foods amba from now on.

“We are delighted at the majority vote by our members in favour of the merger with Arla. By this move, we are laying the foundation for successful growth and strengthening our market position,” says Uwe Krause, Chairman of the Board at Hansa-Milch Mecklenburg-Holstein eG, the cooperative owned by around 1,200 dairy farmers in Schleswig-Holstein and Mecklenburg-Vorpommern.

The tie-up which has now been agreed is not unexpected: both companies have already been cooperating successfully for many years. Hansa-Milch has enjoyed sustained success in northern Germany, and with its Hansano brand is established in that area as one of the main providers of regionally-produced fresh dairy products such as milk, cream and quark.

Arla and Hans-Milch complement one another

Arla Foods amba is backed by around 7,200 farmers in Denmark and Sweden. The Scandinavian dairy company operates successfully on an international footing and is known, amongst other products, for its speciality cheeses BUKO, Castello and “Höhlenkäse”, and for Lurpak butter. The merger sees a complementary expansion to Arla Foods and Hansa-Milch operations:

“Together, we can offer a full range of dairy products from a single provider, making us an even more attractive partner for German retailers,” explains Ove Møberg, Chairman of the Supervisory Board at Arla Foods amba.

Higher milk price and purchase guarantee

Under the merger of the two cooperatives, the Hansa Arla Milch eG farmers are being given a milk purchase guarantee from Arla Foods amba with no time restriction. In addition, Arla is assuring Hansa-Milch eG of a milk payment price calculated on the same basis as is used for its Danish and Swedish members.

“In previous years, the price we paid for milk was generally higher than that given by Hansa-Milch. This means that Hansa Arla Milch eG members can expect a higher price in future,” says Peder Tuborgh, CEO at Arla Foods amba.

The Arla Foods strategy includes paying members the highest possible milk price. “To achieve this objective, we need to continue to grow in Europe, and particularly in the important German market,” explains Tuborgh. “Together with Hansa Arla Milch, our aim is to be one of the top three German dairy companies.”

Hansa-Milch AG will transfer to Arla

The dairy business of Hansa-Milch AG, until now owned by the Hansa-Milch eG cooperative, will transfer to the ownership of Arla Foods amba under the merger arrangements. Manfred Remus, current Hansa-Milch AG Chairman and the man who developed the merger plans together with the executive boards at Hansa-Milch eG and Arla Foods amba, will continue to head up the company with his team. In addition, in the coming months consideration will be given to the possibilities of expanding the plant in Upahl.

Arla Foods amba and Hansa-Milch eG are both cooperatives. Important decisions, such as the merger which is now being implemented, are therefore taken on the basis of the democratic involvement of their members. The members of both cooperatives have now spoken out in favour of the merger, and thus for a strong partnership, by a clear majority.

The only thing still required before the merger is finally completed is approval from the cartel authorities.