The companies said they were examining whether a merger could help them deal with the challenges of the liquid milk market
Freshways Dairy and Medina Dairy have confirmed they were discussing a potential merger to create a ‘sustainable and progressive’ dairy business.
The companies highlighted the challenges of the liquid milk market, which they said had been characterised by the dominance of two major national players, low margins and declining sales volumes.
And despite businesses seeking to ‘consolidate, rationalise and cut costs’ a number have proved unsustainable.
Against this, Freshways and Medina Dairy said they were discussing whether a potential merger would create the basis for a ‘viable, long term, fresh liquid milk business’.
In a statement, they confirmed an entity linked to Freshways has taken security to protect arrangements with the Medina Group. The confidential terms of those arrangements do not give Freshways any control over the day-to-day operations of Medina and the Medina Group remains wholly independent.
If the negotiations are successful, further information will be provided in due course. The parties would expect to notify any merger to the CMA.
Bali Nijjar, managing director of the Freshways group of companies, said: "We are very excited about the possibility of entering into a partnership with the Medina Group, as we believe that the two companies have complementary structures and cultures, which will mean we are able to compete even more effectively with the two large players which dominate the dairy sector in the UK."
Sheazad Hussain, chief executive of Medina Dairy, added they were looking forward to working with Freshways to explore the possibilities of a merger.
“In doing so our joint objective will be to create a business that is leaner, more agile and fit for purpose.
“One that will benefit customers, consumers and suppliers and will ultimately be well placed to grow and develop in a sustainable manner for the long term.”