Dairy firms Lakeland and LacPatrick agree terms on merger
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 long-term 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.