FrieslandCampina flagged its purchase of control of Engro Foods
as "one of the single largest" foreign investments in Pakistan of late as the
Dutch group revealed the deal would cost it a little more than it had expected.
FrieslandCampina said it had made a "total investment" of
E430m ($450m) in acquiring its 51% stake in Engro Foods, Pakistan's second
largest dairy producer.
The sum is some E10m more than the group said in August that
it expected to pay for the holding, and is equivalent to nearly the same as Engro
Foods' revenues, which FrieslandCampina has stated are "about E450m".
The euro has declined some 7% against the dollar since FrieslandCampina
in July unveiled its plans for Engro.
"The execution of this transaction… is one of the single
largest private sector foreign direct investment in Pakistan in recent years,"
the Dutch-based co-operative said, terming Engro "a well organised and highly successful
Hussain Dawood, the chairman of Engro Foods, and of Engro
Corp, which remains a major shareholders after the FrieslandCampina deal, termed
the takeover a "defining moment for Pakistan".
"We believe this transaction will be instrumental in
positioning Pakistan as an attractive investment destination for global
companies and encourage others to follow."
'Growing middle class'
FrieslandCampina said that, through the acquisition, it will
"obtain a significant presence in the Pakistani dairy market in which a growing
middle class is buying more processed milk".
The co-operative has unveiled a strategy lasting up to 2020
which envisages growth fuelled in part by investments in emerging market
countries, with the group also having in recent years acquired, for instance, Philippines-based
Alaska Milk Corporation.
Engro Foods "offers a basis on which we can build further",
said Roelof Joosten, the FrieslandCampina chief executive, adding that "this
acquisition will contribute to the value creation for our member farmers".
Pakistan is one of the world's most populous countries, with
a population estimated at more than 190m, ranking it sixth in the world, behind
China, India, the US, Indonesia and Brazil.
Engro Foods, which employs some 1,600 people, is
particularly strong in UHT milk, an important part of the Pakistani dairy
market, and especially in the tea creamer segment.
Mr Dawood said that the deal with FrieslandCampina would "enables
us to provide a wider array of affordable, high-quality dairy products for a healthier
Pakistan, especially for its younger population".
FrieslandCampina's input also "will help us to accelerate
our work on improving productivity in the dairy sector.
"This is only the beginning of a better and brighter future
for our organisation."