Recommended Acquisition of Arla Foods UK plc

Recommended Acquisition
of
Arla Foods UK plc ("Arla Foods UK")
by
Arla Foods UK Holding Limited ("Arla Holding")
(a wholly owned indirect subsidiary of Arla Foods amba ("Arla amba"))

• The boards of Arla Holding and Arla Foods UK announce the terms of the recommended acquisition by Arla Holding of the 49 per cent. of Arla Foods UK it does not currently own at a price of 71 pence per share in cash (the "Acquisition").
• The Acquisition price values the entire existing issued share capital of Arla Foods UK at £434.5 million and the shares not owned by Arla Holding at £212.9 million.
• The Acquisition price represents a premium of 22.4 per cent. to the Arla Foods UK share price before discussions were announced on 20 October 2006 and a premium of 43.5 per cent. to the average share price over the 3 months prior to the announcement concerning discussions.

Peder Tuborgh, chief executive, Arla amba, commented:

"Outright ownership will ensure that the business of Arla Foods UK derives the full benefits of being part of the largest dairy business in Europe and will enable us to strengthen the relationship with UK dairy farmers. At the same time, Arla amba's global strategy will significantly benefit from the full integration of its UK subsidiary into the Arla amba Group"

Sir David Naish, Chairman, Arla Foods UK commented:

"Since the merger creating Arla Foods UK in 2003, the business has been transformed into a leading British dairy company. We have established strong relationships with our major retail customers and our farmer suppliers. At the same time we have also created a significant increase in shareholder value.

The Independent Directors consider that this offer from Arla amba represents fair value for shareholders and will allow Arla Foods UK to continue its development for the benefit of its staff, customers and suppliers."

Arla Foods UK plc is home to some of the UK’s leading dairy brands including Cravendale, Lurpak and Anchor. Processing approximately two billion litres of milk a year Arla continues to be one of the UK’s leading dairy companies and a supplier of fresh liquid milk and cream to the top seven retailers.

Over 2,500 daily deliveries are made directly to stores nationwide and Arla brands can be found across the dairy category. As well as the leader of the butter, spreads and margarine sector, and a major supplier of other added value products including flavoured milk and cheese, Arla continues to build working relationships with Arla Foods Milk Partnership, a unique group of dairy farmers, which supplies around 90 per cent of Arla's total milk requirements.

Behind this leading business is a team of circa 2,800 people across the UK located at our dairies, distribution centres and head office.