MILK group Dairy Farmers of Britain today said it was creating Britain's largest milk cooperative by buying the Co-op's milk processing business.

DFB said it was paying £75m for Associated Co-operative Creameries (ACC), the UK's fourth biggest milk cooperative with brands including Dairygate, Alive and Dawn.

It said the move would help it speed up progress towards becoming the UK's leading farmer-owned, broad-based dairy company.

DFB was formed in July 2002 by farmers dissatisfied with lack of control over - and returns from - the milk distribution system.

It markets about two billion litres of milk a year from some 3,250 member farms and supplies more than 100 national and regional dairy companies.

In addition to its core milk supply business, DFB has processing sites in Chard, Peterborough and Westbury.

ACC was formed in 1972 and has seven milk processing sites at Cardiff, Llangadog and Llandrynog in Wales, Portsmouth, Whitby, Cricket St Thomas in Somerset and Nantwich in Cheshire. It employs about 3,500 people.

A DFB spokesman said: "There will be a bit of restructuring and reorganisation in the next few months, but we are going to try to keep everyone's jobs."

DFB chief executive Malcolm Smith said the deal would give it more flexibility to expand.

"We welcome ACC to DFB and look forward to an exciting future," he said.

The Co-op said in April that it had decided to explore options for selling ACC, which serves major retailers, food service outlets, food manufacturers and the catering trade.