DESPITE the plans to merge with Waterford Foods to create a major world dairy company, Avonmore Foods is continuing its policy of bolt on acquisitions and is expected to acquire the small Swindon milk processor, Selkley Vale, for around £5 million.

While small, Selkley Vale which is based in Wiltshire and processes around six million gallons of milk for cream and liquid production fits in cosily with Avonmore's existing liquid milk operations in the midlands and south of England.

Selkley Vale was set up in 1991 by former Unigate executive, Ms Ian Wadkins and a group of local dairy farmers. It sells liquid milk in the local area in four pint and six pint poly bottles and is thought to have sales of around £10 million, with profits in the order of £200,000 to £300.000. The group has 50 employees at its Swindon base.

Selkley Vale is a minnow milk processor and its six million gallons compares to Avonmore's annual production of 150 million gallons which includes 95 million gallons of liquid milk.

Given the merger proposal with Waterford, which will be decided by shareholders of both coops within the next couple of months, Avonmore is using its strong balance sheet to pick up small bolton acquisitions as the British dairy industry steadily rationalises itself

Last month, Avon more made a major step to increase its presence in the British chilled meats market with the acquisition of Beni Foods for a total of £54.2 million. This acquisition will be staggered over the next four years and will only cost Avonmore £5.4 million up front with £11 million a year payable over the next three years followed by a final payment of £16.3 million.