FrieslandCampina, Netherlands based dairy cooperative has signed a share purchase agreement with Engro Corporation of Pakistan to acquire 51 per cent of the shares (about 391 million shares) in its subsidiary Engro Foods Limited. The deal is estimated to cost FrieslandCampina around $448 million and is also the largest private sector foreign direct investment (FDI) in Pakistan in recent years.
With an annual production of 38 billion liters of milk, Pakistan is the third largest milk producing country in the world. However, only 9 percent of milk sold in the country is processed. Due to growing middle class and the increasing desire for higher quality milk, as well as because of the increasing urbanization, FrieslandCampina sees opportunity in the market. They believe that the processed milk consumption market could increase further by 6 percent in the next five years.
The Dutch acquirer FrieslandCampina will partner with the International Finance Corporation (IFC) and the Dutch development bank FMO in the share-purchase agreement (SPA). FrieslandCampina is also being advised by Citi on the transaction.
About Engro Foods
Headquartered in Karachi, Engro Foods was established in 2006. Engro Corporation owns approximately 87 per cent of the total share capital in Engro Foods while the remaining 13 per cent is listed on the Pakistani Stock Exchange (PSX).
Engro Foods employs about 1,600 people and has an annual revenues of about $4.75 million (2015). It has a vast network of 1,635 milk collection center that collect milk from about 150,000 farmers on a daily basis.
FrieslandCampina is a Dutch dairy cooperative which was founded as a result of a merger between Royal Friesland Foods and Campina in December 2008. Its major brands include Friesche Vlag, Chocomel, Fristi, Dutch Lady, Appelsientje, Milner, Campina, Landliebe, Optimel, Mona and “Mix’it”.
FrieslandCampina is the world’s largest dairy co-operative and one of the top 5 dairy companies in the world with annual revenue of $12 billion. FrieslandCampina has offices in 28 countries and employs a total of 21,186 people with its products available in more than 100 countries.