No windfall for Arla Foods Milk Partnership members

Members of the Arla Foods Milk Partnership will not be receiving a cash windfall following the takeover of processor Arla Foods UK by its Scandinavian majority shareholder Arla Amba, which already owns 51% of the shares. 

Milk Partnership Ltd, which is owned by members of AFMP, has a 5.29% stake in Arla Foods UK worth about £23m. But it has decided to accept an interest-bearing loan note, redeemable from March 2008 until 2012, from Arla Amba instead of selling the shares.

AFMP chairman Jonathan Ovens said the move allowed the organisation to keep its options open and meant it could have more influence and become more involved with Arla Foods in the future.

Not everybody, however, is happy with the decision. Kent dairy farmer Peter Joules, who is AFMP’s Ashford district chairman, said none of his 15 members felt properly consulted and would rather have had their money back to reinvest in their own businesses.

Mr Joules said it would have been better to wipe the slate clean and then think about reinvesting in the processing business. Another member said she was so cross she was thinking about switching supplier.

However, Mr Ovens said AFMP was a democratic organisation and claimed the majority of its 1700 members approved of the board’s decision.

The takeover of Arla Foods UK will be officially approved at an extraordinary general meeting on 12 March. It will retain the same name but its shares will be de-listed from the London stock exchange in early April.