FrieslandCampina approached Engro, Pakistan’s second-biggest listed dairy group, to buy 391 million shares from its parent Engro Corp, the Asian company said in a stock exchange filing. The acquisition could cost up to €450m.
Friesland’s Asian plans were cited in 2015 accounts published yesterday, detailing net profits of €343m, boosted by a 7.8% sales volume rise, which helped offset the impacts of a difficult year in global dairy markets.
Friesland’s revenues were down 0.7% to €11.3bn. This was due to 2.4% positive volume-mix effect, 7.2% lower sales prices, 0.7% acquisitions and 3.4% favourable currency translation effects.
Strongest growth was in China, Hong Kong, Indonesia, Thailand, Southeast Europe, Middle East and Africa, and the FrieslandCampina Ingredients business group.
The acquistion of Engro would help Friesland gain a footprint in Pakistan,where a growing middle class is buying more processed milk and most people boil the raw liquid before consuming it.
Only 9% of milk sold in Pakistan is processed, but this could rise to 15% in five years, Engro Foods chief executive Babar Sultan told Asian media in December.
Friesland declined to comment beyond the group’s stock exchange announcement. Engro Corp holds more than 87% in its wholly-owned foods subsidiary.
Shares for Karachi-based Engro Foods and parent Engro Corp. rose by their daily limits of 5% following the announcement.