Arla Foods: UK's top dairy

On the hypothesis that Arla amba takes over Arla Foods, this creates a dairy company that dwarfs the size, power and market penetration of Dairy Crest.

Although Dairy Crest ("DC") have issued statements denying formal discussions, they have not denied informal meetings or informal discussions as far as I am aware.

It would seem logical and inevitable from a corporate strategy perspective, that DC -similar to Arla Foods- would have begun/will have to examine take-0ver or merger possibilities sooner or later to remain competitive in the European arena.

It seems that an exciting phase of pan-European industry consolidation for the dairy sector is on the verge of happenning.

But why has the price of Arla Foods weakened since the article in The Guardian on Sunday about a take-over of DC?

This seems slightly irrational to me. -Perhaps a clue lies in the fact that Arla is not a widely followed stock. It appears to me that some retail investors would have sold Arla and switched into DC which is a perfectly acceptable trade and may lead to some interesting short-term profits whilst retaining exposure to the dairy sector. This may have temporarily caused a downward blip in the share price which has risen tremendously in the last month.

However, I do not personally believe in any way that these events surrounding DC will weaken the prospects of Arla amba bidding for Arla Foods. On the contrary, the rumours concerning DC will in my opinion make it all the more compelling and indeed urgent and necessary for the Arla amba / Arla Foods betrothal to take place.

DYOR