Irish companies Lakeland Dairies and LacPatrick Dairies have reached an agreement to merge the two businesses after unanimous approval from their respective board of directors.

The merger will form a new company, which will support production of more than 3,200 milk suppliers and a collective milk pool of nearly 1.8bn litres.

LacPatrick Dairies chairman Andrew McConkey said: “The Board of LacPatrick firmly believes that an amalgamation with our neighbours in Lakeland Dairies is the best thing for our milk suppliers, shareholders and customers.

“With an enlarged milk pool and well invested dairy processing sites on both sides of the border, the new co-operative will be a co-op of scale working in the long-term best interests of dairy farmers, ensuring global market access and serving our valued customers with an even greater capability and an expanded range of high quality, value-added dairy products.”

“Both co-operatives have excellent facilities, technologies and resources with strong synergies across our milk processing footprint.”

The newly formed co-operative is expected to have a combined annual turnover in excess of €1bn.

It will also increase market returns and pay sustainable and competitive milk price in line with market conditions, and work to support dairy farming families on a long-term basis.

The merger is expected to support a sustainable and competitive milk price for thousands of dairy farming families located in north and south region of the country.

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Lakeland Dairies CEO Michael Hanley said: “The economies of scale achievable by combining both societies will create a larger, more efficient, diversified, farmer controlled, global dairy food group with a broad portfolio of value-added products and brands.

“Both co-operatives have excellent facilities, technologies and resources with strong synergies across our milk processing footprint and in the markets we serve at home and abroad.”

“We will be able to expand the potential of our overall portfolio of products, covering Food Ingredients, Foodservice and Consumer Foods.”