FrieslandCampina buys into Pakistan

5 Jul 2016

FrieslandCampina is to acquire 51% of Engro Foods, the second largest dairy company in Pakistan, in partnership with the World Bank Group’s International Finance Corporation (IFC) and the Dutch development bank FMO. The transaction is valued at €420 million.

FrieslandCampina buys into Pakistan

FrieslandCampina is to acquire 51% of Engro Foods, the second largest dairy company in Pakistan, in partnership with the World Bank Group’s International Finance Corporation (IFC) and the Dutch development bank FMO. The transaction is valued at €420 million. The company said that the acquisition of Engro Foods enables FrieslandCampina to obtain a key position in Central Asia. Pakistan is the third largest milk producing country in the world with an annual production of 38 billion litres of milk.

FrieslandCampina said it expects to benefit from the conversion of the market from loose to packaged dairy consumption that will drive the volume growth of packaged dairy products. At present, the company notes, less than 10% cent of tradable milk consumed in Pakistan is processed and offered in packages. The conversion is expected to accelerate in the near future as a result of the growing middle income class, a desire for higher quality milk, as well as the increasing urbanisation.

“The cooperation with Engro Foods will accelerate FrieslandCampina’s route2020 strategy,” said Roelof Joosten, CEO Royal FrieslandCampina. “Through this well organised and highly successful company we will obtain a significant presence in the Pakistani dairy market in which a growing middle class is switching to buying more processed and packaged milk. Engro Foods offers us a basis on which we can build further. This acquisition will contribute to the value creation for our member farmers. We will also contribute to Pakistan’s agricultural sector through knowledge transfer of dairy production and our established dairy development programme.”

“This is a defining moment for Pakistan,” said Hussain Dawood, Chairman of Engro Corporation, the holding company of Engro Foods. “This partnership enables us to provide a wider array of affordable high quality dairy products for a healthier Pakistan, especially for its younger population. Improving the wellbeing of millions of our farmers is a cause that our Group has been focused on for the past five decades. Working with FrieslandCampina, a company owned by farmers, will help us to accelerate our work on improving productivity in the dairy sector. I am convinced that this partnership will create tremendous long term value.”

“This is a momentous occasion for us,” said Babur Sultan, CEO Engro Foods. “Engro Foods has enjoyed tremendous success since its inception in 2006 and has become one of the most respected companies in Pakistan. The collaboration with FrieslandCampina will definitely have a big impact on the development of Pakistan’s dairy value chain whilst enabling Engro Foods to offer better value to its consumers via an enriched product portfolio as well as strengthening our innovation capabilities. Going forward, I foresee huge advantage out of this partnership for our country, stakeholders, employees, product portfolio and consumers. At the same time, similarities in our strategic direction and corporate culture will create a strong platform for accelerated but sustainable growth for the company.”

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