Delight over £80m Muller merger
An £80 million move bringing together processing giants Muller and Dairy Crest has been completed with a new company name.
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The deal was completed on Boxing Day bringing Muller Wiseman Dairies and Dairy Crest's dairy operations together to create new organisation Muller Milk & Ingredients.
Chief executive of Unternehmensgruppe Theo Muller –the German parent company – Richard Kers said: "With this transaction now concluded we have the opportunity, together with our colleagues, customers, farmers and suppliers, to build on our progress in the UK and create an exciting new future for our dairy business."
Muller announced its plans to acquire the dairy operations of Dairy Crest on November 6, subject to approval by competition authorities – something approved on October 19.
The new business will employ more than 8,000 people and process 25 per cent of Britain's milk production, with 2,000 dairy farmers contracted as suppliers.
The move has also seen Muller re-name its Muller Dairy yoghurt and desserts business – based in Market Drayton, Minsterley and Telford– as Muller Yogurt & Desserts.
Managing director Bergen Merey said: "We've got great plans for 2016 and it makes sense to rename the business to reflect the products which we are proud to make."
Muller Milk & Ingredients managing director Andrew McInnes said: "It is clear that we have a committed workforce and a key priority is to get to know our new colleagues and ensure that they have the information they need to perform their roles and their questions are answered.
"For now it's very much business as usual and colleagues from Muller Wiseman Dairies and Dairy Crest deserve enormous credit for successfully delivering their obligations to customers over the key festive period."
Employees will be able to see plans for the new organisation in site meetings and online. Customers, farmers and suppliers will be sent information on the new organisation.
External growth
The fastest route for growth is through external growth – through mergers or contested take-overs. There are various forms of integration – explained below with some recent examples:
Horizontal integration: Horizontal integration occurs when two businesses in the same industry at the same stage of production become one – for example a merger between two car manufacturers or drinks suppliers. Recent examples of horizontal integration include:
• Nike and Umbro
• NTL and Telewest (new business eventually renamed as Virgin Media)
• Lloyds TSB (now Lloyds Banking Group) taking over HBOS
The fastest route for growth is through external growth – through mergers or contested take-overs. There are various forms of integration – explained below with some recent examples:
Horizontal integration: Horizontal integration occurs when two businesses in the same industry at the same stage of production become one – for example a merger between two car manufacturers or drinks suppliers. Recent examples of horizontal integration include:
• Nike and Umbro
• NTL and Telewest (new business eventually renamed as Virgin Media)
• Lloyds TSB (now Lloyds Banking Group) taking over HBOS
The advantages of horizontal integration include the following:
1. It increases the size of the business and allows for more internal economies of sale – lower long run average costs – improved profits and competitiveness
2. One large firm may need fewer workers, managers and premises than two – a process known as rationalization again designed to achieve cost savings
3. Mergers often justified by the existence of “synergies”
4. Creates a wider range of products - (diversification). Opportunities for economies of scope
5. Reduces competition by removing rivals – increases market share and pricing power
2. One large firm may need fewer workers, managers and premises than two – a process known as rationalization again designed to achieve cost savings
3. Mergers often justified by the existence of “synergies”
4. Creates a wider range of products - (diversification). Opportunities for economies of scope
5. Reduces competition by removing rivals – increases market share and pricing power
Vertical integration:
Vertical Integration involves acquiring a business in the same industry but at different stages of the supply chain. Examples of vertical integration might include the following:
• Film distributors owning cinemas
• Brewers owning and operating pubs
• Tour operators / Charter Airlines / Travel Agents
• Crude oil exploration all the way through to refined product sale
• Record labels, record stations
• Sportswear manufacturers and retailers
• Drinks manufacturers integrating with bottling plants
• Film distributors owning cinemas
• Brewers owning and operating pubs
• Tour operators / Charter Airlines / Travel Agents
• Crude oil exploration all the way through to refined product sale
• Record labels, record stations
• Sportswear manufacturers and retailers
• Drinks manufacturers integrating with bottling plants
The main advantages of vertical integration are:
1. Greater control of the supply chain – this helps to reduce costs and improve quality of inputs.
2. Improved access to important raw materials used in manufacturing.
3. Better control over retail distribution channels e.g. pub companies who can ensure that their beers and wines are sold in tenanted pubs and clubs.
1. Greater control of the supply chain – this helps to reduce costs and improve quality of inputs.
2. Improved access to important raw materials used in manufacturing.
3. Better control over retail distribution channels e.g. pub companies who can ensure that their beers and wines are sold in tenanted pubs and clubs.
Lateral Integration
This involves companies joining together that produce similar but related products. Examples include:
• Microsoft and Skype
• Google and You Tube
• Gillette and Proctor & Gamble
• Microsoft and Skype
• Google and You Tube
• Gillette and Proctor & Gamble
