Arla drops out of race to acquire Egyptian cheesemaker Arab Dairy


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Arla drops out of race to acquire Egyptian cheesemaker Arab Dairy

Related tags Middle east Saudi arabia

Arla Foods has decided not to make a formal bid for Egyptian cheesemaker Arab Dairy Products Company after an assessment of the company.

After a period of due diligence​ the European dairy cooperative has decided not to press on with its September 11 non-binding E£65.00 (US$9.09, €7.03) per share bid to acquire Arab Dairy.

Cairo-based Arab Dairy confirmed in an Egyptian Stock Exchange (EGX) filing that Arla “has dropped a bid to acquire”​ the business.

Immediately after tabling its offer in September, Arla initiated an investigation to assess the "more sensitive aspects"​ of the Cairo-based business.

Had it been found to be "sound and healthy"​ Arla planned to officially lodge its proposal.

It has, however, decided not to further its interest in Arab Dairy.

"Our conclusion, based on the due diligence, is that we shall not place a final tender for Arab Dairy,"​ said Finn S Hansen, executive vice president of Arla's international business. 

"Egypt is, however, still an interesting market for us and we are working on alternative options to enter the market soon,"​ he added. 

Arla's Egyptian ambitions should come as no surprise.

Euromonitor predicts the country's dairy market will grow from US$2.1bn (€1.7bn) in 2014 to US$4.77bn (€3.87bn) in 2019.

Egyptian cheese sales are meanwhile forecast by Euromonitor to jump from US$843.9m (€684m) in 2014 to US$1.69bn (€1.37bn) in 2019.

Arab Dairy, which is best known for its Panda cheese brand, currently controls the seventh largest stake of the Egyptian cheese market. 

French dairy giant Lactalis, already Egypt's fourth largest dairy, is now front runner in the race to acquire Arab Dairy. 

Last month, a coalition of Middle Eastern Lactalis businesses - Al Nour for Dairy Industries, Best of France of Dairy Products, and Best Cheese Company for Dairy Products – lodged a EGP 66 (US$9.23, €7.36) per share bid for Arab Dairy.

Its offer topped two made earlier in the month. 

On November 4, Cairo-based private equity firm Pioneers Holdings unveiled an EGP 56 (US$7.83, €6.25) per share bid.

The following day, Saudi Arabian firm Arrow Food Distribution tabled an EGP 57.12 (US$7.99, €6.37) per share offer.

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