‘It will be great for all concerned’- Hanley says of possible co-op merger

Seamus Enright

Monaghan-based dairy co-op LacPatrick has entered into exclusive discussions with rival Lakeland Dairies over a proposed merger between the two entities.

The move follows a high-level meeting between the two firms last week, after which a joint statement was issued.
Any agreement reached 'will be subject to shareholder approval and the relevant regulatory clearance'.
The move follows an announcement back in April that LacPatrick was searching for a joint venture or partnership with a view to securing the future of the business for its suppliers, shareholders, staff and customers.
“The situation is as we announced last week. We have entered exclusive talks and any outcome from that will be as a result of shareholder and regulatory approval,” CEO at Lakeland Dairies Michael Hanley told The Anglo-Celt this week.
He refused to drawn on timelines, only to state “the process is the process and it will be down to the shareholders” to sign off on the final deal.
Mr Hanley did, however, add his belief the proposed merger is “positive” for both parties, stating: “It will be great for all concerned.”
LacPatrick, which currently handles and processes more than 600 million litres of milk from more than 1,000 farmers across the Border region, is the result of a merger between the Town of Monaghan (ToM) Co-op and Ballyrashane Co-op finalised in 2015.
It manages three operations in Tyrone, Coleraine and Monaghan Town.
Last year, in a bid to Brexit-proof operations, LacPatrick announced a €33M investment in a 30,000 sq ft state-of-the-art technology centre in Co Tyrone, creating 20 jobs.
The site at Artigarvan near Strabane has resulted in a doubling of capacity, with two new milk powder products developed for export markets.
Aurivo, Dale Farm and Glanbia had expressed interest in buying LacPatrick following the April announcement but Lakeland's apparent dominance put paid to that, thus signalling what could be the largest such agreement since Killeshandra joined with Lough Egish Co-Op in the early 1990s.
That merger saw the emergence of the Lakeland brand, which later added Bailieborough Co-op in 2002 and the LE Pritchitt facility in Newtownards in Co Down a year later.
Lakeland has, in recent years, has also invested heavily, with new dryer and packaging facilities at Bailieborough.
Exporting to 77 countries worldwide, Lakeland Dairies operates across 15 counties in both Ireland and Northern Ireland, as well as carrying dedicated operations in the UK and the US.
It is the country's second largest dairy co-operative, processing an estimated 1.2 billion litres of milk annually. That intake is expected to increase by 22% to almost 1.45 billion litres by 2022.
The amalgamation of LacPatrick and Lakeland will ultimately come down to decision by the shareholders of both co-ops. Those meetings, the Celt understands, are expected to take place in the coming months.
Issues expected to be raised concern future branding and where the new entity will be headquartered, with Lakeland having invested significantly in developing new office at the former Quinn Direct/Liberty Mutual site near Cavan Town.
Former editor and owner of The Anglo-Celt and agricultural journalist John O'Hanlon reported widely on the merger between Killeshandra and Lough Egish Co-Op back in the early 90s.
While warning such matters are “not always straight forward” as the protracted discussion back then transpired, he added it was “no surprise” to see the dairy industry consolidate further still.
“The camps were very divided and it was all down to the offer that [Larry] Goodman was putting forward as well was a large part of it. There was a lot of canvassing going on on both sides. There were all sorts of lucrative propositions being put forward but what it eventually came down to was what farmers believed would be in their own best interests at the end of the day,” said Mr O'Hanlon, providing insight into how the then merger materialised. “That will happen again here I'm sure.”
Mr O'Hanlon praised the formation of Lakeland, which he said stood against a great many detractors who suggested the region had little right to claim itself as a dairy processing powerhouse. Of the merger, if it goes ahead, he said it will lead to further “shared synergies” in a bid to increase overall market share.