Two European dairy co-operatives are planning to merge into a new global dairy player.
Dutch multi-national FrieslandCampina and Belgium-based Milcobel have signed a framework agreement to form a 22,000-staff, 30-country operation.
The co-ops are aiming to finalize a detailed merger proposal in the first half of 2025 and submit it for approval by Milcobel shareholders and FrieslandCampina members. A deal of this size would also require green light from anti-competition authorities.
If realized, the merger would result in one of the largest global dairy companies, supplied by nearly 11,000 farms and a combined revenue of €14bn ($14.5bn).
By supplier numbers, the new entity would surpass the size of existing EU dairy co-ops like Arla Foods (around 9,000 dairies), Germany’s DMK (around 8,900) and France’s Sodiaal (circa 8,500).
‘Bigger than the sum of its parts’
Both FrieslandCampina and Milcobel have been looking to improve operational efficiencies and strengthen their core expertise as challenging consumer and commodity environment has tested their business resilience.
The Dutch multi-national recently announced a new organisational structure to best-seize market opportunities and address disappointing financial performance, having suffered a €149m ($154m) loss in 2023 and cut 1,800 of its 22,000 jobs.
Meanwhile, Milcobel announced it would sell YSCO, one of the largest private-label ice cream makers in Europe, to focus on core dairy ingredients and consumer products (more on this below).
Possible synergies resulting from the proposed merger are in markets segments such as mozzarella, white dairy products and ingredients, as well as environmental sustainability.
FrieslandCampina chair Sybren Attema commented: “The combination of FrieslandCampina and Milcobel is bigger than the sum of its parts. It creates a future-oriented, combined dairy cooperative that is resilient and capable of capitalising on opportunities in the dynamic global dairy market.
“This strengthens our appeal to member dairy farmers, business partners and employees. Moreover, this step supports us in realising a leading milk price for our member dairy farmers, now and in the future.”
Betty Eeckhaut, chair of the board of Milcobel, added: “The cooperative philosophy, which is deeply-rooted at both Milcobel and FrieslandCampina, is the bedrock for this proposed merger. Our goal remains to create added value for our member dairy farmers.
“Through our regional complementarity, we will become the cooperative dairy partner of choice for current and new members, with a solid milk supply for a successful future.
“For employees, the new organisation provides great opportunities to grow in an international environment. For customers, this merger means more innovation, an expanded product portfolio and further professionalisation of our services.”
YSCO sale completes
In other news, Milcobel has completed the divestment of private-label ice cream maker YSCO to hedge fund management firm Davidson Kempner for an undisclosed sum.
Davidson Kempner, which also owns independent ice cream producer Gelato d’Italia under its ice cream investment platform Glacier, said that bringing the two ice cream firms together would create one of the largest third-party ice cream manufacturers globally, with revenues in excess of €600m ($619m).
Cem Karakaş, chairperson of Glacier and partner at Afendis, an operating partner in the deal, said: “Glacier is perfectly positioned to capitalize on strong growth in the fragmented European third-party ice cream sector.
“By building on the success of Gelato d’Italia and leveraging YSCO’s scale and expertise in long-run production of large batch products, Glacier is well-placed to be a leading player in Europe. This acquisition will be the launchpad for further expansion across the globe.”
YSCO was founded in 1949 and went through a period of rapid expansion in the 1990s. The company produces more than 180 million litres of ice cream annually and supplies the largest European supermarket chains and their own-label brands.
The company owns two facilities, in Langemark, Belgium, and Argentan, France; around 1,000 staff work across both.
