Dutch company to acquire Engro Foods with an investment of around $460 million

[Devil Soul]

Dutch company to acquire Engro Foods with an investment of around $460 million
By AFP
Published: March 3, 2016
PHOTO: FILE

KARACHI: A Dutch dairy cooperative is set to buy out a Pakistani food giant with an investment of around $460 million, in what would amount to the largest private sector takeover by a foreign firm in the country’s history.

FrieslandCampina International Holding BV intends to acquire a 51 per cent stake of Engro Foods Limited, one of the largest listed companies at the benchmark Pakistan Stock Exchange (PSX), a notification on the bourse’s website said Thursday.

The deal would bring in a minimum investment of $460 million based on the Pakistani firm’s present stock value.

Engro Foods’ 2015 profit up 256%

“Yes, it is the largest ever deal in the private sector,” analyst Faisal Shaji, head of research at Standard Capital Securities, said.

Citibank Pakistan is the financial advisor.

Shahji added the deal would be closely watched by international investors eyeing the emerging South Asian economy.

“Pakistan is already in the radar range of the world corporate sector and this deal further lifts its image outside,” he said.

If finalised the Dutch takeover would boost Pakistan’s foreign direct investment statistics.

FDI was down by 57 per cent to $336 million in Pakistan for the first seven months of the current financial year compared to the corresponding period in the last financial year ending June 2015.

Pakistan expects its economy to grow by 4.5 percent for the 2015-16 financial year due to lower oil prices, planned improvements in the energy supply, investment related to the China Pakistan Economic Corridor (CPEC), buoyant construction activity, and acceleration of credit growth.

 

[Zibago]

Frieslandcampina Seeks to Buy 51% of Pakistan's Engro Foods
Investment could cost about $500 million based on share prices
Deal would help Dutch company capture processed milk market
Royal FrieslandCampina NV, a Dutch dairy company, is seeking to buy a 51 percent stake in Engro Foods Ltd. of Pakistan in a deal that would help tap a market where consumers mainly drink unprocessed raw milk.
The European dairy company approached Pakistan’s second-biggest listed dairy firm to buy about 391 million shares from its parent Engro Corp. and may start due diligence shortly, the Asian company said in a stock exchange filing Thursday. The deal could cost the company about $500 million, based on Thursday’s share price.
The acquisition would help the Dutch company to 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 percent of milk sold in the country is processed and this could reach as much as 15 percent in five years, Engro Foods Chief Executive Officer Babar Sultan said in an interview in December.
“The potential is huge and an untapped market exists when it comes to processed milk,” said Danish Ali Kazmi, senior research analyst at Alfalah Securities Ltd. The deal will provide “FrieslandCampina with a lucrative opportunity to capture the market,” he said.
Frieslandcampina spokesman Jan-Willem ter Avest declined to comment beyond the stock exchange announcement.
Shares for Karachi-based Engro Foods and parent Engro Corp. rose by their daily limits of five percent following the announcement.
Engro Corp. holds more than 87 percent in its wholly-owned foods subsidiary, according to the statement. Citigroup Global Markets Ltd. in London is the financial adviser to the deal, while the Pakistan unit of the bank is the manager, the company said.
Frieslandcampina Seeks to Buy 51% of Pakistan's Engro Foods - Bloomberg Business
@django @MaarKhoor @RiazHaq @Akheilos @friendly_troll96 @haviZsultan @PaklovesTurkiye

 

[haviZsultan]

Personally as one of the few and only Pakistani companies that have been successful I do not want Engro foods to be taken by foreigners. Everyone protects their businesses. I remember in Canada what a problem it was for Wind and Egyptian companies to come in when there was no harm. The logic was canadians losing their jobs.

I think a Pakistani giant company should emerge from Pakistan like Nokia emerged from Finland.This takeover will be a punch to Pakistani entrepreneurs and I hope the deal doesn't go through

 

[S.Y.A]

Personally as one of the few and only Pakistani companies that have been successful I do not want Engro foods to be taken by foreigners. Everyone protects their businesses. I remember in Canada what a problem it was for Wind and Egyptian companies to come in when there was no harm. The logic was canadians losing their jobs.

I think a Pakistani giant company should emerge from Pakistan like Nokia emerged from Finland.This takeover will be a punch to Pakistani entrepreneurs and I hope the deal doesn't go through

was thinking the same thing. Engro should have been the one investing abroad, instead it is selling its businesses.

I remember seeing this news: Global diversification: Engro acquires US-based food company - The Express Tribune
and thinking that a Pakistan based company is going big finally.

 

[haviZsultan]

was thinking the same thing. Engro should have been the one investing abroad, instead it is selling its businesses.

And its all for quick money and short term goals. Engro can expand further but as I have seen with Pakistani businesses like Cupola is that if a huge lump sum is being offered to them they take it. For the owner its bliss. A huge amount of money being offered to him with which he can live a luxerious life for the rest of the time he has without the stress of difficult work and directing the company. But the person does not think that in 30 years time what a power the company can be. Proctor and Gamble and Unilever are examples. I think Pakistanis should look to the future.

As powerful local companies emerge the local economy shows signs of growth. I really do not wat Engro to fall.

 

[S.Y.A]

And its all for quick money and short term goals. Engro can expand further but as I have seen with Pakistani businesses like Cupola is that if a huge lump sum is being offered to them they take it. For the owner its bliss. A huge amount of money being offered to him with which he can live a luxerious life for the rest of the time he has without the stress of difficult work and directing the company. But the person does not think that in 30 years time what a power the company can be. Proctor and Gamble and Unilever are examples. I think Pakistanis should look to the future.

As powerful local companies emerge the local economy shows signs of growth. I really do not wat Engro to fall.

quite unfortunate really.

 

[NP-complete]

Its a win-win situation. Engro is the most profitable private-sector corporation in Pakistan. Dutch company is buying a golden hen. And european food companies are food experts. They know the chemistry of food like no one else. I can wager the taste of OMORE icecream will become much much better.

 

[Imtiaz_Sarwar]

Engro foods is earning a lot of profit. If it is sold then the profits will go to the Dutch company. And what will Engro do with 500 million. A good question. Anybody care to comment.

 

[Samlee]

Engro foods is earning a lot of profit. If it is sold then the profits will go to the Dutch company. And what will Engro do with 500 million. A good question. Anybody care to comment.

The Money Will Go To Dawoods And They Still Retain 49%

 

[TheNoob]

Its a win-win situation. Engro is the most profitable private-sector corporation in Pakistan. Dutch company is buying a golden hen. And european food companies are food experts. They know the chemistry of food like no one else. I can wager the taste of OMORE icecream will become much much better.

Hopefully the stocks will remain the same for others to do business with these guys.

 

[RazorMC]

And its all for quick money and short term goals. Engro can expand further but as I have seen with Pakistani businesses like Cupola is that if a huge lump sum is being offered to them they take it. For the owner its bliss. A huge amount of money being offered to him with which he can live a luxerious life for the rest of the time he has without the stress of difficult work and directing the company. But the person does not think that in 30 years time what a power the company can be. Proctor and Gamble and Unilever are examples. I think Pakistanis should look to the future.

As powerful local companies emerge the local economy shows signs of growth. I really do not wat Engro to fall.

This is the sad fact of our business owners. Bright futures are sold for pennies and an early retirement.

Pakistan, as a whole, needs to learn the importance of holding on to corporate vision and mission.

 

[Sipahi]

Sell it for 500 million USD and setup a new company with 250 million USD with almost same staff. Be Kamina

 

[Thəorətic Muslim]

Are the Dutch buying Engro or investing in it?

 

[AUz]

Sad.

Pakistan needs local companies to grow and become powerful. But alas, Western capital dominates everything. They don't allow others to rise up.

Hopefully Engro uses 500 million to do something positive.

Finger crossed.

 

[That Guy]

People don't seem to actually understand how this deal works. The Dutch are buying a majority stake, but Engro foods will still have Pakistani shareholders, mainly Engro Corporation.

You heard that right, Engro Corporation. Engro Foods is merely an arm of Engro Corporation as a whole, and it STILL has a stake in Engro Foods.

https://en.m.wikipedia.org/wiki/Engro_Corporation

My point is, you guys need to stop being so cynical and cheer up. This is a good move.

@AUz @Thəorətic Muslim @mshahid @RazorMC @TheNoob @Samlee @Imtiaz_Sarwar @NP-complete @S.Y.A @haviZsultan @Zibago @Devil Soul