Shareholders of dairy processing co-operatives Lakeland Dairies and LacPatrick Dairies have given the thumbs up to a merger of the two societies.
At their respective SGMs held earlier this week in Cavan and Cookstown, shareholders voted resoundingly in favour of the deal.
The ballots of each society were conducted independently by the Irish Co-operative Organisation Society (“ICOS”).
The ballot revealed 97.24% of shareholders of Lakeland Dairies voted in favour of the merger while 95.99% of shareholders of LacPatrick Dairies voted in favour.
Alo Duffy, Chairman of Lakeland Dairies, said: “The shareholders of both societies have created a great good for co-operative dairy farming. By combining our co-operatives and operations, we will continue our strong progress in a very meaningful way. The new society being formed through this merger will continue to be farmer owned and controlled while paying a sustainable and competitive milk price in line with market conditions into the future.”
Andrew McConkey, Chairman of LacPatrick Dairies, said: “By voting in favour of the merger, we are confident that both the LacPatrick and Lakeland shareholders have created a sustainable platform for dairy production in the northern half of the country. This will create stability, scale, efficiency and further added value for our milk producers together with enhanced global market access for our high quality dairy products.”
Michael Hanley, CEO of Lakeland Dairies and Group CEO Designate of the News Society, said: “Underpinned by the confidence shown by the members of each co-operative, the combined organisation will be a competitive, international dairy food business which will work as a platform to secure the future of our dairy farmer members for generations to come. It will deliver economies of scale and commercial synergies, processing increased volumes of milk and providing greater capability to address global customer needs for high quality dairy foodservice, food ingredients and consumer products.”
Subject to the necessary regulatory approvals, it is envisaged that the merger will be completed early in 2019. The new society will adopt the name of Lakeland Dairies. With 3,200 suppliers, the merged co-operatives will process over 1.8 billion litres of milk annually and will have annual revenues of over €1Bn. The combined organisation will have substantial cashflow to underpin the development of the business. It will also create efficiencies across the organisation and its operations which will enhance the value and return from the merged societies for the benefit of milk producers.
The outcome of the ballot has been welcomed by the Ulster Farmers’ Union.
Deputy president, Victor Chestnutt, welcomed Lakeland and LacPatrick being given the green light by their shareholders to merge, following months of uncertainty.
Mr Chestnutt said the merger will bring challenges and opportunities for dairying in Northern Ireland.
“The new business will have a strong balance sheet to make progress and act quickly to develop a plan to drive efficiency. Centralising and rationalising its operations must be at the core of the merger agenda. An improved milk price will stabilise the new Lakeland milk pool,” said the UFU deputy president.
In July the UFU criticised the 2.5 pence per litre base price gap between the highest and lowest milk buyers in Northern Ireland.
“While this has been trimmed back slightly it remains sizeable and must be tackled as part of this merger,” added Mr Chestnutt.