Arla Gets Go-Ahead To Acquire German Allgäuland

DENMARK and GERMANY - The European Commission has cleared under the EU Merger Regulation the proposed acquisition by the Danish dairy cooperative Arla Food of German dairy producer Allgäuland-Käsereien GmbH.
calendar icon 8 November 2011
clock icon 3 minute read

Tim Ørting Jørgensen, Executive Vice President in charge of Arla Foods’ international markets, is delighted that Allgäuland-Käsereien will now become a member of the Arla Group. In September, Allgäuland’s milk producers gave the green light to joining Arla. With the EU’s approval in place, the acquisition can now proceed with effect today, November 8th.

As Germany is one of Arla’s core markets, the aim is to become one of the country’s leading dairy companies. The first key step towards achieving this ambition was taken at the beginning of the year with the merger with the North German Hansa-Milch, which produces fresh products and butter. With the acquisition of Allgäuland-Käsereien now in place, Arla will also be present in the southern part of Germany.

"We see important potential in Allgäuland-Käsereien’s cheese production. They produce excellent speciality cheeses for which there is important international potential and it is for this reason that the dairy is of interest to Arla Foods.

"Some of their products will supplement the cheeses Arla already makes, among them the cheeses marketed under the House of Castello® quality brand. We see great potential in Allgäuland’s products and not only in Germany,” says Tim Ørting Jørgensen.

The Commission found that the merged entity will continue to be constrained by a number of credible competitors in the markets concerned.

The Commission assessed the impact of the transaction on the supply of a number of dairy products including liquid dairy cream, packet butter, non-flavoured quark and cheese but found that the transaction would not give rise to serious competition concerns in the supply of any of these products.

The Commission also examined the transaction's impact on the supply of Whey Protein Concentrate ("WPC"), lactose and permeate which are all products obtained from the processing of whey (a liquid by-product of cheese). Arla's activities overlap in respect of these products with those of German dairy company Milei in which Allgäuland currently has a shareholding of 30 per cent, the majority shareholder being the Japanese Morinaga Milk Industry Co. Ltd.

In relation to WPC, the Commission found that most concerns raised during the market investigation were not merger specific and that those that were, related to minimal amounts and there are alternative suppliers. Furthermore the market investigation showed that entry is relatively quick and can be substantial.

The market investigation also showed that the European lactose and permeate markets would remain competitive after the merger, because Arla and Milei will face sufficiently strong competition from other well established suppliers such as FrieslandCampina, Lactalis, Glanbia, and Sachsenmilch in lactose and Volac, BMI and Lactalis in permeate.

The Commission therefore concluded that neither the transaction nor the overlap between Arla and Milei would raise significant competition concerns.

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