Suppliers’ wait and see stance over dairy takeover

Most farmers’ represent-atives were reserving their opinions after Wiseman said its main shareholders were in favour of the offer from Müller UK, Shropshire-based subsidiary of a German dairy giant.

The company said there was no obvious way in which the deal would affect its staff or its farmers – but Müller would obviously want to consider its new situation.

David Cotton, chairman of the Royal Association of British Dairy Farmers, said: “We see the German processor’s investment decision as part of the much-needed consolidation within the UK dairy processing sector and the fact it already operates a very modern business structure bodes well for the future. Furthermore, the move provides the UK dairy sector with welcome new export opportunities.”

Some commentators expressed surprise that Müller wanted to buy into the cut-throat competition in liquid milk supplies – in which Wiseman is the biggest UK player.

Wiseman’s is Scotland-based and gets most of its English milk from Cheshire and Shropshire. It has only three suppliers in Yorkshire.

Milk quotas dealer and dairy industry commentator Ian Potter was predicting mergers would be the theme of this year in a newsletter published just before the Wiseman deal was agreed in principle – subject to a formal vote by shareholders.

He said: “With a good wind, 2012 could see the first vestiges of our largest three GB liquid milk processors concentrated to two businesses. When/if three become two, perhaps there will be less aggression to gain market share. Throughout 2010/2011, all three have fought like gladiators to win volume and retailers have simply sat back and said, basically, ‘thanks lads’. It cannot carry on.”

He advised producers to take advantage of a relaxation of EU rules which would allow them to negotiate en masse.