Fane Valley and Lakeland Dairies Finalise Deal
Fane Valley and Lakeland Dairies Co-operative societies have confirmed that final agreement has been reached on a deal structure which will see Lakeland acquire the Fane Valley Dairies business based at
Banbridge, Co. Down, effective from 1st May 2016.
This simplified deal structure is considered to be a better option
than the originally proposed strategic joint ventures, announced
previously in August 2015, which would have involved both the dairy and agri-business interests of the respective businesses.
Trevor Lockhart, chief executive of Fane Valley Co-operative in
Northern Ireland said: "Fane Valley and Lakeland Dairies are
absolutely convinced that the interests of their respective milk
suppliers will be better served in a combined business which can
deliver greater economies of scale and enhanced market capability.
"The option to deliver this through a joint venture model has been
the subject of an in depth assessment by both co-operatives working closely together for eight months. In the end, it was evident that
some of the complexities involved in establishing and operating a
cross-border JV of this nature were going to detract from the key
strategic purpose of the merger and the ability to fully realise allcommercial synergies. Accordingly, Fane Valley has opted not to takeup a shareholding in Lakeland Dairies Co-operative Society as was
intended in the original JV proposal.
"The principal goal of Fane Valley has been to create a dairy
business which is better positioned to deliver maximum returns to
milk suppliers in the years ahead. Recognising this, the Board has
decided to focus its attention on supporting Lakeland to drive
forward the expanded dairy business.
Referring further to the new way forward, he continued: "Our
collective priority over the coming months will be to achieve the
successful transition and integration of the Fane Valley dairy
business within Lakeland Dairies. In view of the importance of this task we have decided that the proposed agribusiness Joint Venture
would prove a distraction from the main goal, and that will not be
advanced.
He added: "Fane Valley will continue to develop and invest in its
wider agriculture and food related businesses."
Michael Hanley, chief executive of Lakeland Dairies Co-operative
said: "The strategic rationale behind Lakeland Dairies and Fane
Valley co-operating to advance the interests of their respective
businesses is as strong today as it was in August 2015. It is
extremely positive that the Boards of both co-operatives have had
the foresight to recognise the limitations of the initially proposedJoint Venture arrangements and the courage to adapt and revise theirapproach.
"The current market environment is undoubtedly challenging both
for producers and processors. However we have a strong ambition,
in Lakeland, to further strengthen our position in global markets
as a leading provider of high quality foodservice products and dairyfood ingredients.
"The agreement we have reached with our neighbouring co-operative,
Fane Valley, represents a major step forward for the industry and
for Lakeland Dairies, albeit not via the structure initially
envisaged. The move will reinforce our continuing commitment to pay the highest possible milk price to all our milk producers through
continuing innovation, efficiency and excellence in everything we
do. We look forward to working with our colleagues in Fane Valley
to progress the mutual success of our milk suppliers in the years
ahead."
Mr Hanley concluded: "Producers with queries on the new arrangementsare encouraged to contact their usual farm liaison officer who will be pleased to provide further information."
Banbridge, Co. Down, effective from 1st May 2016.
This simplified deal structure is considered to be a better option
than the originally proposed strategic joint ventures, announced
previously in August 2015, which would have involved both the dairy and agri-business interests of the respective businesses.
Trevor Lockhart, chief executive of Fane Valley Co-operative in
Northern Ireland said: "Fane Valley and Lakeland Dairies are
absolutely convinced that the interests of their respective milk
suppliers will be better served in a combined business which can
deliver greater economies of scale and enhanced market capability.
"The option to deliver this through a joint venture model has been
the subject of an in depth assessment by both co-operatives working closely together for eight months. In the end, it was evident that
some of the complexities involved in establishing and operating a
cross-border JV of this nature were going to detract from the key
strategic purpose of the merger and the ability to fully realise allcommercial synergies. Accordingly, Fane Valley has opted not to takeup a shareholding in Lakeland Dairies Co-operative Society as was
intended in the original JV proposal.
"The principal goal of Fane Valley has been to create a dairy
business which is better positioned to deliver maximum returns to
milk suppliers in the years ahead. Recognising this, the Board has
decided to focus its attention on supporting Lakeland to drive
forward the expanded dairy business.
Referring further to the new way forward, he continued: "Our
collective priority over the coming months will be to achieve the
successful transition and integration of the Fane Valley dairy
business within Lakeland Dairies. In view of the importance of this task we have decided that the proposed agribusiness Joint Venture
would prove a distraction from the main goal, and that will not be
advanced.
He added: "Fane Valley will continue to develop and invest in its
wider agriculture and food related businesses."
Michael Hanley, chief executive of Lakeland Dairies Co-operative
said: "The strategic rationale behind Lakeland Dairies and Fane
Valley co-operating to advance the interests of their respective
businesses is as strong today as it was in August 2015. It is
extremely positive that the Boards of both co-operatives have had
the foresight to recognise the limitations of the initially proposedJoint Venture arrangements and the courage to adapt and revise theirapproach.
"The current market environment is undoubtedly challenging both
for producers and processors. However we have a strong ambition,
in Lakeland, to further strengthen our position in global markets
as a leading provider of high quality foodservice products and dairyfood ingredients.
"The agreement we have reached with our neighbouring co-operative,
Fane Valley, represents a major step forward for the industry and
for Lakeland Dairies, albeit not via the structure initially
envisaged. The move will reinforce our continuing commitment to pay the highest possible milk price to all our milk producers through
continuing innovation, efficiency and excellence in everything we
do. We look forward to working with our colleagues in Fane Valley
to progress the mutual success of our milk suppliers in the years
ahead."
Mr Hanley concluded: "Producers with queries on the new arrangementsare encouraged to contact their usual farm liaison officer who will be pleased to provide further information."