Freshways, based in Acton, and Medina Dairy, based in Windsor, said they believed the new business would be in the best interests of their combined staff, customers and the British dairy farmers that supplied them.
According to the announcement, the merger, which is subject to regulatory approval, would create the basis for a viable, long term, fresh liquid milk business. It would have the scale and agility to compete with the largest players in the UK dairy sector.
The new business claimed a combined turnover of £400m, propelling it into the top 10 UK dairy processors, ahead of County Milk Products, Glanbia Cheese, First Milk and Yeo Valley, according to the latest financial comparative.
The business said it would employ 1,000 staff and process about 500m litres of British Red Tractor farm assured milk. A new complementary board and management structure will be put in place to oversee the merger, continuing operations and strategic development of the combined business.
Medina Dairy had declared a pre-tax loss of £10.1m in its results for the 52 weeks to 26 October 2019 and that it was ‘in discussions with another significant dairy distributor with the intention of rationalising the distribution network’.
However, when it posted these results in April 2021, Medina Dairy stated: “The results were significantly affected by the provision of £8.9m for bad debts as a result of customer trading difficulties exacerbated by the COVID-19 pandemic in 2020.”
‘Loss of major grocery customer’
Medina Dairy had faced further challenges with ‘the loss of a major grocery customer resulting in a reconfiguration of its milk supply arrangements’, it said.
Freshways recorded a turnover of £15.8m and Medina Dairy recorded turnover of £166.7m in their latest sets of accounts posted on Companies House.
Sheazad Hussain, who is currently chief executive of Medina Dairy and Bali Nijjar, who is currently managing director of the Freshways group of companies, have been appointed as joint managing directors.
“Throughout our discussions it has become increasingly apparent how complementary both businesses’ capabilities and cultures are,” Nijjar and Hussain said.
“As such, through merging we will be able to harness these synergies to create a leaner, more agile and fit for purpose business. A business that will benefit customers, consumers and suppliers and ultimately, we believe, will be well placed to grow and develop in a sustainable manner for the long term.”