Lakeland-LacPatrick merger creates second largest dairy processor on island

The merger between Lakeland Dairies Co-operative Society Limited and LacPatrick Co-operative Society Limited will progress with Irish and UK regulatory approval.
The Competition and Markets Authority (UK) and the Competition and Consumer Protection Commission (Ireland) issued regulatory approval for the deal yesterday (Tuesday) afternoon.
The authorities ruled that competition would not be adversely affected as a result of the merger and both cleared the transaction unconditionally.
A number of standard legal and administrative procedures will now be completed to enable the new Society to begin trading at the end of March. Until then, the two co-ops will continue to operate independently with each setting its own milk price.
The regulatory authorities’ clearance was the last significant hurdle for the merger. In October 2018, the Lakeland and LacPatrick shareholders voted 97% and 96% respectively in favour of forming one of the largest dairy processors in Europe.
The new Society – to be called Lakeland Dairies Co-Operative Society Limited – will be the second largest dairy processor on the island of Ireland with a cross-border milk pool of 1.8bn litres, produced by 3,200 farms from 15 counties. The new co-op will have a combined annual turnover in excess of €1bn, creating internationally competitive scale while ensuring efficient costs of operation.
Chairman of Lakeland Dairies, Alo Duffy, said the merger will create efficiencies and maximise market returns: “I express our strong appreciation to the shareholders of both societies for their confidence in this historic development which will underpin the long term sustainability of our dairy farming enterprises for the future.”
Andrew McConkey, the Chairman of LacPatrick Dairies, said the merger gives farmers security to make long-term business decisions: “We look forward to the continuing future success of Lakeland Dairies as a fully integrated dairy industry player, creating efficiencies and further added value for our milk producers with enhanced global market access for our high quality dairy products.
“With a large milk pool and well-invested dairy processing sites on both sides of the border, the new Lakeland will be a co-op of considerable scale. We will work in the long-term best interests of dairy farmers while serving our valued customers with even greater capability and an expanded range of high quality, value-added dairy products.”
The CEO Designate of the new Lakeland Dairies is Michael Hanley. He said the merger will create strategic advantages: “Significant work will have to take place to make the new organisation as efficient as possible and to return the strongest possible milk price back to our farmers. The combined businesses have the potential to be one of the powerhouses of the global dairy industry but we must work hard to realise that potential by creating economies of scale and combining our complimentary product mix. We will leave no stone unturned in continuing the growth, development and success of Lakeland Dairies.”
The company says that the combination of both societies will create a larger, efficient, diversified, farmer controlled, global dairy food group with a broad portfolio of value-added products and brands. Both co-operatives have excellent facilities, technologies and resources with strong synergies across their milk processing footprint and in the markets they serve at home and abroad. The combined business will be able to expand the potential of its overall portfolio of products covering Food Ingredients, Foodservice and Consumer Foods, while ensuring continuing market access to the United Kingdom, Europe and the Globe.
The combined organisation will have substantial cashflow to underpin the development of the business. There merger was motivated by the potential to generate cost savings both operationally and administratively across all operations. The factors will enhance the value of the merged societies.