Denmark-based Arla Foods and German group DMK are moving ahead with plans to merge after securing EU approval for the deal.
The two cooperatives confirmed having received the green light in a joint statement after the European Commission “unconditionally approved” the deal yesterday (May 28).
Brussels concluded that the transaction would not raise competition concerns in the European Economic Area (EEA).
The merger, first announced in April last year, will take effect on June 1. Until the planned two-year integration process is completed, the companies will continue to operate as two independent entities.
Arla Foods President Jan Toft Nørgaard said: “This is a historic day for our cooperatives, for the next generation of dairy farmers and for European food production.
“We can move forward together to ensure the necessary scale, long-term economic resilience and investment capacity needed to help shape a food sector with reduced impact on the climate and nature.”
The merger will create “Europe’s largest dairy cooperative”, bringing together 11,200 milk producers in seven European countries.
The combined group will have a milk reserve of 19.4 billion kg per year and pro forma revenues of more than €20 billion ($23.2 billion).
It will operate under the Arla name and employ around 28,800 people worldwide.
The companies said the alliance aims to ensure “stable dairy production and production” in Europe and “strengthen its ability” to deliver value to people around the world through global dairy brands.
They described the combination as “vital” for European food security amid “geopolitical and economic changes.”
DMK Group CEO Ingo Müller said: “The merger will sharpen our technological advantage, accelerate innovation and open up new opportunities for growth and collaboration, driven by our shared brands, our deep category expertise and the complementary strengths of DMK and Arla.
“With a collaborative culture and a strengthened position in our markets, we will be even more a pillar of strength in ensuring the safe supply of food for people in Europe and around the world.”
The merged cooperative will be headquartered in Viby J, Denmark.
Nørgaard will serve as president and Arla Foods CEO Peder Tuborgh will serve as CEO. Once the integration process is complete, DMK’s Müller will join Arla’s executive management team as executive vice president.
Meanwhile, both cooperatives have been investing to expand production in recent months.
Earlier this month, Arla Foods in Australia reached a deal to acquire Australian cottage cheese producer Brancourts.