Arla Foods Limited has agreed to acquire Yeo Valley Dairies Limited, a subsidiary of the Yeo Valley Group Limited, allowing it to use the Yeo Valley brand in butter, spreads, cheese and milk.

According to the deal, the Yeo Valley yogurt, ice cream, cream and desserts business will continue to be run independently through Yeo Valley Group, which remains under the ownership of the Mead family.

The agreement is expected to give Yeo Valley the opportunity to continue its focus on strengthening its core business, whilst remaining independent and family-owned.

In the meantime, Arla is also planning to expand its presence in the organic market, with one in four households now reportedly purchasing organic products.

Commenting on the deal, Tomas Pietrangeli, managing director, Arla Foods Limited, said: “The potential for future investment in range through this licensing agreement with Yeo Valley provides a significant opportunity to offer a greater choice to consumers at attractive prices.

“Our ambition is to encourage customers to trade up from standard to organic milk, butter and cheese, driving overall growth for organic across dairy categories.”

The announcement has also been described as a “milestone in the journey of Yeo Valley and organic dairy in the UK”, with Tim Mead, organic farmer and custodian of the family business, adding:
“Arla’s farmer-owned credentials are aligned to the values and ethos that the Yeo Valley brand is based on – ‘Supporting British Family Farms’.

“We have a long-held ambition to grow organic dairy in the UK, because at Yeo Valley, we believe that organic dairy is better for the planet, for the cows and for health.”

Completion of the transaction will take place following merger approval by the UK Competition and Markets Authority.