Farm Ireland

Thursday 24 January 2019

LacPatrick in merger talks with three firms - including rivals

Gabriel D’Arcy of LacPatrick Dairies. Picture: Paul McErlane
Gabriel D’Arcy of LacPatrick Dairies. Picture: Paul McErlane

Donal O'Donovan and Louise Hogan

One of the biggest dairy co-ops in the Border region is in talks with as many as three potential merger partners.

The Irish Independent understands that the board of LacPatrick Dairies has been approached by one overseas investor and two domestic co-operatives about possible tie-ups.

It is understood a domestic deal, to merge with a rival with a more diversified income base, is the most likely outcome if there is a deal.

Lakeland Dairies is understood to be the most likely merger partner.

Co-op members will have the ultimate say, and any merger would need backing from 75pc of members.

LacPatrick was formed from the merger of the old Town of Monaghan Dairy in the Republic and Ballyrashane Diary in Co Tyrone. It processes more than 600 million litres of milk from more than 1,000 farmers, roughly half on each side of the Border.

The business is profitable and has made significant investment to Brexit-proof its operations, but has been under pressure to lift its milk prices to match rivals.

In a statement yesterday, LacPatrick confirmed that it is looking at possible deals.

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"The board of LacPatrick Dairies met on Tuesday, April 17, and have agreed on pursing a number of strategic options with a view to identifying the best way forward that is in the interest of its suppliers, shareholders, staff and customers.

"This may or may not include partnerships, joint ventures, mergers and other opportunities to consolidate the dairy industry.

"The decision by the board of LacPatrick comes following a number of approaches from international and national companies from the sector in recent months."

It has three operations - in Tyrone, Coleraine, and in Monaghan, where it is headquartered.

Last month LacPatrick unveiled a "Brexit-proofing" technology centre in Co Derry in a £30m investment creating 20 jobs.

The site at Artigarvan near Strabane has now doubled its capacity, with a total workforce of 90, and will be able to make two new milk powder products for export.

Its investment has been supported by Danske Bank. Chief executive Gabriel D'Arcy said: "The new dairy technology centre at Artigarvan will provide security of capacity for local dairy farmers producing milk to the highest standards. The plant provides long-term security to our supplier base and positions the business at the forefront of global dairy technologies.

"We are now able to produce two new lines of milk powder for international markets, with the dairy technology centre able to process milk all year round."

Mr D'Arcy said the "core logistical risk of" Brexit has been mitigated by the Artigarvan expansion. As an exporter out of the UK, LacPatrick will be closely monitoring the trading agreements being negotiated by London.

Mr D'Arcy added: "We will be focused on driving product development, building relationships with processors seeking access to our technology and expanding our customer base in Asia and the Middle East.

"We have made a significant capital investment with the clear purpose of delivering a sustainable return to our suppliers over the coming months and years ahead."

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