Pioneers never says no to Panda producer Arab Dairy in $33m deal

By Eliot Beer

- Last updated on GMT

Pioneers sealed the deal earlier this month
Pioneers sealed the deal earlier this month

Related tags: Saudi arabia, Egypt

Egyptian investment firm Pioneers Holding has bought a majority stake in Arab Dairy, outbidding foreign competitors with a total bid of US$33.5m.

Pioneers sealed the deal earlier this month, after a contest which also saw Arla Foods, Paras Dairy from India, and Arrow Food Distribution from Saudi Arabia compete to buy out the Egyptian dairy producer. Arla, Paras and Arrow withdrew early on, but Pioneers then had to face Lactalis International, via its Al Nour subsidiary, which joined the bidding in November.

Bidding war

The competition saw Pioneers’ bid for Arab Dairy rise from EGP56 (US$7.82) per share in August last year, to a final bid, of EGP71.11 (US$9.36) last month, trumping Lactalis’ bid of EGP71 (US$9.34). This was enough to bag Pioneers a 52% stake in the company, in addition to its existing 16.7% holding, for EGP255m (US$33.5m) – equivalent to around 60% of the value of Arab Dairy, according to Pharos Holding, which negotiated the deal.

Arab Dairy is one of Egypt’s leading cheese makers and has a highly sought after product range and market presence, and we’re happy to have been able to conclude the transaction successfully​,” said Sherif Abdelaal, managing director and head of investment banking at Pharos.

This is a milestone transaction, reflecting the attractiveness of Egypt’s consumer sector in terms of its growth potential which is driven by Egypt’s large and young consumer base, competitive cost structure and its strategic geographical position which has positioned Egypt as an ideal export hub to the promising EMEA regions​,” he added.

Investment plans

According to media reports, Pioneers intends to keep Arab Dairy listed on the stock exchange, and plans to invest substantially in the firm to increase production, after a thorough analysis and production of a business plan.

Arab Dairy is the seventh largest Egyptian cheese producer, according to Euromonitor. Its flagship Panda brand of cheeses secured unlikely worldwide viral video fame in recent years, thanks to an award-winning, and slightly unnerving series of adverts featuring a vengeful panda​ attacking people who refused to buy or eat Panda-brand cheese, under the tag line “never say no to Panda​”.

With completion of the fiercely-contested Arab Dairy acquisition coming less than two months after Kellogg triumphed over the Abraaj Group for Egyptian snacks producer Bisco Misr​, many analysts are predicting much more acquisition activity in Egypt, particularly in food production. The Financial Times quoted Ramzi Nasrallah, CFO of Egyptian food and poultry producer Wadi Group, as being “bullish” about the prospects for the market, with the firm planning to invest US$38m in expectation of 30-35% growth this year.

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