Emmi share sale to bolster export investment

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Emmi, the leading Swiss dairy company, has announced it is to make
an initial public offering (IPO) in a bid to bolster export sales
and consolidate investment across its nutritional dairy-based
drinks division, Tom Armitage reports.

According to Emmi CEO Walter Huber, the company will offer a million new shares, priced between CHF90 and CHF100 (€60-66) each, with an over-allotment option which will allow the company to release a further 85,000 shares depending on the strength of demand.

The dairy company will use the investment - expected to raise an estimated €70 million - to bolster sales across its principal export markets, the US, Canada and the European Union.

The company's public shares will be offered exclusively to Swiss investors, but European investors will also have the option of investing through a private placement - which allows investors to buy common stock at a discount to the current market value.

Analysts have independently valued the company's shares at CHF125 (€83) each, describing the share sale offer as 'generous'. Despite this, analysts still predict the majority of Emmi's shareholders will be Swiss-based.

Emmi currently generates CHF400 million (€264 million) through exporting its products - which include speciality Swiss cheeses Emmentaler and Gruyère - and envisages a 10 per cent growth increase in export sales over the next few years as a result of the increased investment in exports. In 2004, the company predicts an overall growth rate of 4 per cent.

In a bid to consolidate sales across the domestic and EU markets, the company has successfully exploited the burgeoning trend for innovative nutritional dairy-based probiotic drinks, with the growth of its Actifit and Benecol brands.

In recent years this has proved to be a highly competitive sector, with Emmi's brands fighting for consumer awareness alongside Unilever's Pro.Activ and Danone's Actimel - Europe's leading probiotic drink which currently has a 60 per cent market share.

Stephan Wehrle, Emmi's spokesman, told DairyReporter.com​ that the IPO was part of an ongoing strategy to "gain market share"​, and that the company was seeking to become "Europe's most innovative dairy company"​.

"In view of the liberalisation in the worldwide agriculture sector we have to be prepared if we want to succeed in an 'open' Europe,"​ he added, hinting that Emmi's future growth strategy would be focused on acquisitions rather than simply organic growth.

Last year Emmi reported sales of CHF1.88 billion and net profits of CHF42.7 million. Cheese sales accounted for 49 per cent of sales, with chilled products and dairy divisions accounting for 24 and 25 per cent of sales respectively.

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