Fan Milk takeover a 'major step' in African expansion: Danone

By Mark ASTLEY contact

- Last updated on GMT

Fan Milk takeover a 'major step' in African expansion: Danone

Related tags: Africa, Burkina faso, West africa, Danone

Danone has entered into an agreement with growth market investment specialist, The Abraaj Group, that will see it gradually assume a controlling stake in West African dairy vendor, Fan Milk International.

In a statement issued yesterday, Danone and Abraaj announced that they had sealed a deal to jointly acquire Danish firm Fan Milk International, which currently operates in Nigeria, Ghana, the Ivory Coast, Liberia, Burkina Faso, Benin, and Togo.

Fan Milk manufactures and markets a range of products, including juices, frozen yogurt, ice cream, and flavored milk served in sachets and cartons, to around 250m customers in the seven aforementioned countries through a “unique street vending system.”

Under the terms of the deal, which is scheduled for completion before the end of the calendar year, Danone will initially hold a 49% stake in Fan Milk.  Abraaj will control the remaining 51% majority stake.

Danone’s interest in Fan Milk will, however, increase gradually into a controlling stake in coming years, he statement added.

"Major step" in African expansion

Fan Milk, which began life as Ghana Milk Company in 1960, was established by Danish entrepreneur, Erik Emborg.

Fan Milk, as it was renamed in 1962, set up shop in Nigeria in 1963 and Togo in 1985, began exporting to Benin and Burkina Faso in 1992 and 1996 respectively, and expanded into the Ivory Coast in 2002 and Liberia in 2009.

The company, which reported sales of around €120m in 2012, aims long-term to become one of West Africa's leading food firms.

Danone already boasts a presence on the African continent, but in South Africa and several Maghreb markets, not West Africa.

“This transaction represents a major step in Danone’s expansion in Africa,” ​said Danone chief operating officer, Emmanuel Faber.

“Fan Milk is a company with a unique business model driven by a neighbourhood sales and distribution platform working through 31,000 independent vendors. Danone is already present in North and South Africa, and we will now be able to develop the dairy product market in West Africa," ​Faber added.

Abraaj originally agreed in June 2013 to acquire a 100% stake of Fan Milk, but cut Danone into the deal in exchange for the company's fresh dairy category knowledge.

“We look forward to partnering with Danone in order to accelerate the growth and penetration of Fan Milk’s portfolio of leading consumer food brands across West Africa,”​ said Arif Naqvi, the founder and CEO of The Abraaj Group.

"Complex sales channels"    

The proposed acquisition of Fan Milk Danone and Abraaj comes just weeks after European dairy cooperative Arla Foods established a partnership with Ivorian distribution company, Mata Holdings.

From its new address in Abidjan in the Ivory Coast, Arla will pack and sell its Dano brand milk powder on the continent for the first time.

Speaking with DairyReporter.com at the time, Arla Foods spokesman, Theis Brøgger, said that the partnership with Mata Holding was essential if it was to navigate the Ivory Coast’s “complex sales channels.”

Related topics: Manufacturers, Danone, Emerging Markets

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1 comment

When

Posted by Ernest,

New product introduced.
Good to know

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