Arrabawn Co-op says it has agreed in principle to buy the Dawn Dairies milk business in Galway from Kerry Group for an undisclosed sum.
Tipperary-based Arrabawn said the deal would be a very positive step for the co-op. Chairman Michael Flaherty said it would strengthen the company's position in the market as the liquid milk division plays a very important role in its overall business.
The Arrabawn and Dawn milk collection and milk sales operations overlap geographically in many areas. Mr Flaherty said there are significant savings and gains to be made by rationalising the businesses.
The Arrabawn chairman said the deal would increase its competitiveness and make the company a very attractive low-cost producer for all major retailers.
'This is extremely important in the light of the ongoing threat of cheap milk being imported from Northern Ireland,' Mr Flaherty stressed.
He said that while Arrabawn's Kilconnel plant will see some additional employment due to increased volumes, the deal will also likely lead to the loss of some jobs in service areas which overlap.
However, he emphasised that the purchase of the Dawn business will ultimately improve the stability of Arrabawn and secure employment in the longer term. He said the sector is notable for its 'intense competition' and is likely to see see more mergers and acquisitions in the future.
If the deal goes through, the Dawn Dairies employees will transfer to Arrabawn Co-op, the company said.
