£1bn dairy merger called off

The creation of a £1 billion dairy giant has been called off after two farming co-operatives abandoned merger plans.

Glasgow dairy business First Milk and Bristol-based Milk Link had been hoping to join forces to create one of the UK's biggest milk suppliers, churning out nearly 3 billion litres a year - or a quarter of the country's supply.

But the firms said that the deal was called off after they were unable to agree a valuation of the two businesses and how the new entity would be structured.

They said: "Despite extensive discussions, it has not been possible to agree terms for a merger that either party felt they could recommend to their memberships at the present time."

First Milk is owned by 2,600 farmers across the UK, while Milk Link comprises 1,650 UK farmers mainly in the South West of England. Both co-operatives turn over around £500 million a year.

The National Farmers' Union (NFU) had backed the move and said it was "bitterly disappointed" at the outcome.

Gwyn Jones, NFU dairy board chairman, said: "We know that all dairy farmers, not just members of the two co-ops, will be very surprised to hear the news that the merger has been called off."