Dairy firms Lake­land and LacPa­trick agree terms on merger

Irish Independent - Business Week - - FRONT PAGE - Gavin McLough­lin

DAIRY pro­ces­sors LacPa­trick and Lake­land have agreed terms on a merger.

The deal comes af­ter LacPa­trick put it­self up for sale ear­lier this year.

The Mon­aghan-based busi­ness had cut the milk price it paid to farm­ers just be­fore the an­nounce­ment, say­ing there was “con­tin­ued weak­ness” in the dairy mar­ket. It had pre­vi­ously un­der­taken a £30m (€33.8m) in­vest­ment in a new plant at Ar­ti­gar­van in Ty­rone.

The new com­pany will be the sec­ond-largest dairy pro­ces­sor on the is­land of Ire­land, be­hind Glan­bia.

LacPa­trick chair­man An­drew McCon­key said the deal would give the co-op’s farm­ers “the nec­es­sary se­cu­rity to make longterm busi­ness de­ci­sions and pro­vides sta­bil­ity for con­tin­u­ing progress in dairy farm­ing for the next gen­er­a­tion”.

“The board of LacPa­trick is unan­i­mously rec­om­mend­ing our share­hold­ers to ap­prove this merger at our forth­com­ing SGM.

“With an en­larged milk pool and well in­vested dairy pro­cess­ing sites on both sides of the Bor­der, the new co-op­er­a­tive will be a co-op of scale work­ing in the long term best in­ter­ests of dairy farm­ers, en­sur­ing global mar­ket ac­cess and serv­ing our val­ued cus­tomers with an even greater ca­pa­bil­ity and an ex­panded range of high qual­ity, value-added dairy prod­ucts,” Mr McCon­key said.

Ex­clu­sive dis­cus­sions be­tween the par­ties started in June.

In Au­gust, LacPa­trick an­nounced that CEO Gabriel D’Arcy was leav­ing the busi­ness “fol­low­ing dis­cus­sions”.

Reg­u­la­tory ap­proval as well as share­holder ap­proval on both sides will be re­quired.

The com­bined busi­ness will have turnover in ex­cess of €1bn. The Lake­land Dairies name will be main­tained for the new en­tity.

Lake­land CEO Michael Han­ley said the new group would have “sub­stan­tial cash flow to un­der­pin the de­vel­op­ment of the busi­ness”.

“The busi­ness will have con­sid­er­able po­ten­tial to in­crease rev­enues and gen­er­ate the cost sav­ings nec­es­sary to en­sure com­pet­i­tive milk prices for our dairy farm­ers in the fu­ture. It will con­tinue to en­sure mar­ket ac­cess to the United King­dom, Europe and the world.

“Both co-oper­a­tives have ex­cel­lent fa­cil­i­ties, tech­nolo­gies and re­sources with strong syn­er­gies across our milk pro­cess­ing foot­print and in the mar­kets we serve at home and abroad.

“We will be able to ex­pand the po­ten­tial of our over­all port­fo­lio of prod­ucts, cov­er­ing food in­gre­di­ents, food-ser­vice and con­sumer foods,” Mr Han­ley added.

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