DAIRY Farmers of Britain this week bought Associated Co-operative Creameries for £75m.

The sale, welcomed by both parties, instantly created the UK's largest milk co-operative.

Martin Beaumont, chief executive of the Co-operative Group, described it as "a marriage of two successful co-operative enterprises", adding: "It creates a major new force in this competitive market sector and can only be good for members, employees, customers and consumers alike."

Malcolm Smith, chief executive of DFB, said it was an exciting day for both companies. "The acquisition marks a huge step towards fulfilling our ambitious growth plans, and that means great news for our customers, employees and farmers," he said.

"We welcome ACC staff to DFB and look forward to working together to build our new business."

Lord Grantchester, director of DFB and chairman of the Cheshire branch of the Country Land and Business Association, said milk producers would now have a major say in the future of their industry.

"From being a milk distribution business processing 5pc of members' milk, DFB will now process 55pc, guaranteeing market access and stability of returns to over 3,250 dairy farmers," he said.

Douglas Chalmers, CLA Northern regional director, said the deal gave back to dairy farmers the control of their own business. "It is a good thing for milk producers and therefore a good thing for farming as a whole," he said.

Tim Brigstocke, chairman of the Royal Association of British Dairy Farmers, praised DFB's "bold decision" which would give it more control of its own destiny.

DFB was formed in July 2002 by farmers who were unhappy with the milk prices they received and their lack of influence in the milk sector. It markets 2bn litres of milk a year from 3,250 member farms.

ACC has an annual turnover of £400m. It processes and manufactures 1bn litres of liquid milk, 20,000 tonnes of cheese, and 14,000 tonnes of value-added milk products from seven sites across the UK.

Based in Gateshead and with 60 depots, including Stockton, Hartlepool, and Merrybent, near Darlington, it employs 2,597. It has two manufacturing creameries in Wales and five processing dairies, including Blaydon and Whitby.

The Co-operative Group announced in April that, after a strategic review, it was exploring options for the sale of ACC.

Mr Beaumont, chief executive, said the dairy industry had gone through significant change in recent years and consolidation had resulted in fewer and bigger players.

"The proceeds of the sale will be reinvested in support of the group's strategic plans for its trading businesses," he said. "In particular, we cannot afford to ease off on the pace of acquisitions in food retailing, nor in pharmacy and travel where we are delivering first class services to our members and customers."

All ACC staff will transfer to DFB on existing terms and conditions.

The Co-operative Group was advised by HSBC Bank plc Hammonds.

Usdaw, representing 1,000 ACC workers, welcomed an end to the uncertainty over the future of jobs. "Usdaw is pleased the new owners are DFB as we feel it offers the best prospects for job security for our members," said a spokesman