Arla Foods has expressed its interest in the dairy assets held by Arabian Food Industries, which plans to split into two entities.
A “non-binding offer” from Arla for a majority stake in Arabian Food Industries, also known as Domty, is off after the Egyptian group decided to separate in two.
However, the Danish dairy giant said today (14 April) it would hold talks with Domty over its dairy assets.
In October, Arla put forward a proposed bid to buy a majority stake in Domty.
At the time, the Lurpak owner said the offer was “non-binding” with the company underling it was “looking at the details” before deciding whether to proceed with a firm bid.
However, Arla said today Domty’s decision had changed its position.
"At the expiration of the due diligence period, Arabian Food Industries Company has announced its plan to separate the company into two entities. Arla Foods now withdraws the non-binding offer made for the share majority of the entire business and instead explores a potential deal for the entity that owns the dairy business once Domty has successfully completed the demerger,” Kim Villadsen, the SVP for Arla’s business in the Middle East and north Africa, said. “Both companies have agreed to continue the positive and constructive dialogue we have had so far while this process takes place.”
As well as dairy products, Domty markets juices and bakery items.
In 2024, the company generated sales of E£9.2bn ($180.4m), up from E£7.5bn a year earlier. Its net profit after tax stood at E£501.2m, versus E£454.4m in 2023.
Domty issued correspondence from Arla that said the Castello cheese owner had not completed its due diligence on the entire business and would not be able to finish the work now the company had announced its proposed demerger.
“Arla still has the desire to explore a potential entry to the promising Egyptian market,” the letter to Domty MD Mohamed Omar El Damaty read. “Accordingly, Arla intends to continue interactions with Domty and its major shareholders and to monitor the developments of the demerger process and its due diligence requirements to evaluate the feasibility of a potential acquisition of the entity that would own the dairy business.”
Last week, Arla announced plans to merge with German dairy cooperative DMK Group, forming an entity of more than 12,000 farmers across seven countries.
The pair said in a joint statement the deal will create “the largest dairy cooperative in Europe”, with members in Denmark, Sweden, the UK, Germany, Belgium, Luxembourg and the Netherlands.
The merger is subject to regulatory approval and the backing of the board of representatives in both cooperatives in June.
It could bring a combined pro-forma revenue of €19bn ($20.75bn) to the new entity, which will carry the Arla name and be headquartered in Viby J, Denmark.
