Arla makes non-binding bid for Egyptian dairy

Arla is making a non-binding bid for all shares in Arab Dairy Products Company, a listed company based near Cairo. If the company is found to be sound and healthy, Arla looks set to become one of the top five or six players in the Egyptian dairy sector.

A so-called due diligence phase is now commencing, where Arla, after having made a non-binding bid for up to 100 per cent of the shares, has access to detailed information about the more sensitive aspects of Arab Dairy’s business which are not published in its annual reports. 

“Our bid is non-binding, but has now become official because Arab Dairy is listed on the Egyptian Exchange. The company seems well-aligned with our ambitions in Egypt, and we are now looking at the details before deciding whether or not to actually purchase the business,” says Rasmus Malmbak Kjeldsen who is Senior Vice President for Arla’s business in the Middle East & Africa.

Arab Dairy is interesting because it has a strong position in both the retail sector and food service, which ties in well with Arla’s focus on these particular sales channels. The acquisition can place Arla among the top five or six biggest players in the Egyptian dairy sector, and gives it a market share of 13-15 per cent in the cheese categories. 

Arab Dairy – highlights: 

• Revenue: EUR 68m in 2013
  
• Sales volume: 43,000 tonnes of dairy products in 2013
  
• Number 1-4 in several of the main categories, primarily feta-like cheese, processed cheese and yellow cheese
  
• Main brand: Panda
  
• Eight distribution centres and 125 distribution vehicles operating nationwide
  
• Production capacity 80,000 tonnes at a modernised facility 50 km outside Cairo – with land for possible extension  
  

“Arab Dairy’s local production is based on recombining, where water is added to milk powder and then processed into cheese. Approx. 80 per cent of this milk powder is imported to Egypt. Consequently, there is considerable potential for using milk supplied by owners in value-added products which we can sell in a growing market,” says Rasmus Malmbak Kjeldsen.  

Egypt – facts: A growth country

Egypt is one of the biggest dairy markets in the Middle East and North Africa, a region that has a lot in common when it comes to dairy consumption. The Egyptian population totals almost 90 million people and, like its purchasing power, it continues to grow. In addition, many consumers are moving away from dairy products produced at home or locally to eating products manufactured and packed at commercial dairies and bought in shops. 

Read more about Arab Dairy at www.arabdairy.com

Arla Foods is a global dairy company and co-operative owned by 13,500 dairy farmers circa 3,000 of whom are British.

Dating back to 1881, Arla’s purpose is to secure the highest value for its farmers’ milk, while creating opportunities for their growth. With production facilities in 11 countries and sales offices in a further 30, Arla is the world’s sixth largest dairy company and largest supplier of organic dairy products. Arla has a total of more than 18,000 colleagues and its products are sold under the well-known brands Arla®, Lurpak® and Castello® in more than 100 countries.

Arla Foods UK is the largest dairy company in the country and is home to leading dairy brands Anchor, Cravendale, and Lactofree. It processes 3.5 billion litres of milk a year and has a turnover of £2.2 billion. As well as being number one in fresh liquid milk, butter, spreads and cream, Arla is the UK’s largest cheese manufacturer. It has also built the world’s largest fresh milk facility located at Aylesbury and has plans for it to be the first zero carbon site of its kind. The UK business has a team of approximately 4,000 colleagues located at its dairies, distribution centres and head office.