Friesland in Romania takeover bid

Related tags European union

Friesland Romania has confirmed that it has made a public bid for a
controlling stake in Romanian dairy group Napolact. The Dutch-owned
company says that it intends to increase its 41 per cent stake to
over 50 per cent.

Parent company Friesland Coberco Dairy Foods first invested in Napolact in 2002. The new stake targeted by the company is said to amount to $10 million, and the bid is deadlined for 23 April.

But the company's plans for Romania remain modest. R.J.A. Van Dongen, spokesman for Friesland Coberco Dairy Foods, said: "We are not aiming for major growth in the country. It is our strategy to strengthen and improve our position there."

Friesland already has a presence in several other eastern European countries. In the last two years it has acquired stakes in companies in both Slovakia and Hungary - countries which are due to join the EU on 1 May, offering significant opportunities for growth, in particular in terms of cross-border trade in the enlarged 25-country bloc.

However, in Romania - which will not join the EU this year but could become a member in 2007 - the company has made it clear that its primary interest is the domestic market.

Friesland is already the market leader in Romania and is in second and third place in Hungary and Slovakia respectively.

Napolact operates five factories in Romania, all situated in the north western region of Transylvania. The company has an annual turnover of €27 million and employs around 1,400 people. It produces a wide range of dairy products including fresh fermented products throughout Romania.

According to Friesland's latest financial results, released early last month, the company struggled as a result of market stagnation in western Europe, but the Romanian investment is not seen as a short-term means of countering poor results elsewhere.

"We are not looking for company growth, we are looking to increase our position [in the Romanian market],"​ said Van Dongen. "Our investment is not a direct reaction to the western European recession. We wish to improve our leading brands in a profitable region."

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