Arla Foods has entered the race to buy Egyptian dairy firm Arab Dairy Products Co.
The dairy group has announced a non-binding bid offer for up to 100% of the shares in the company.
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Arla’s bid, priced at EGP65 a share, comes after Egyptian investment firm Pioneers Holding made an offer worth EGP56 a share. Pioneers already owns 25% of Arab Dairy.
Arla said the move was aimed at making it one of the “top five or six players” in the Egyptian dairy sector.
“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 a share of the business,” said Rasmus Malmbak Kjeldsen, senior vice president for Arla’s business in the Middle East and Africa.
Arla is set to conduct due diligence on Arab Dairy. A spokesperson said it was “too early” to say whether it would up its offer should Pioneers submit a second bid.
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By GlobalDataArab Dairy Products Co. posted annual sales of DKK508m (US$88.2m) in 2013. It has interests in both the retail sector and foodservice. The acquisition would give Arla a 13-15% market share in the cheese category, it said.
Earlier this year in an interview on the sidelines of the Gulfood trade show in Dubai, Kjeldsen told just-food Arla was looking at building “stronger partnerships in west and north Africa, with a particular focus on Egypt and Libya. He added he expected trade to grow by 20-25% across Africa, inclusive of Egypt, in the next four years.
