Dairy Crest has given its doorstep and middle-ground milk business a massive boost with the purchase of Express Dairies from Arla Foods.
The £33m deal will create the UK’s leading doorstep and middle-ground business with two million customers, said the milk processor’s chief executive Drummond Hall.
Express Dairies has 77 distribution depots, dairies in Liverpool and Nottingham, 1850 employees and distributes about 390m litres of milk a year.
For the year ending 30 September 2005 it made a pre-tax profit of £7.2m on a turnover of £229m.
Mr Hall said: “The integration of Express Dairies into our existing operations will generate substantial operational and financial synergies.”
Theses synergies are expected to peak at £9m in 2008/09, he added.
Arla Foods said rationalisation of the middle-ground and doorstep sectors had been necessary for some time and it would be concentrating on building its brands.
Chief executive Tim Smith said: “The home delivery sector’s share of the liquid milk market in England and Wales has reduced dramatically since 2000 from 25% to 11%.
“Having explored a number of strategies for the business we determined that a sale was the best-value creating alternative for our shareholders.”
However, as part of the deal, Arla will continue to supply the business’s raw milk for an undisclosed period of time.
For more details and reaction see the next issue of Farmers Weekly (28 July).