EC Clears Arla Foods, Milk Link Merger With Conditions
News: The proposed merger between Denmark-based food company Arla Foods and UK-based dairy cooperative Milk Link has received approval from the European Commission (EC). Arla Foods has been asked to sell milk drinks business Milk Link in order to satisfy the EC's competition concerns related to the UK long-life milk market. The merger, which is subject to regulatory approval, will complete on October 1. As part of the deal, Arla will retain a dedicated senior level management team and make resources available to preserve the economic viability, marketability and competitiveness of the business.
BMI View: We believe the acquisition of Milk Link by Arla will help the company to attain its growth and profitability objectives through to 2015. In fact, the merger will help Arla become the UK's largest dairy company and the third largest in Germany by 2015. It will also boost revenues to beyond DKK75bn by 2015. Moreover, profitability levels could improve in the medium term thanks to increasing scale effects and cost savings.