Arla Foods Adjusts Strategy Amid Domty's Demerger
Source: dairynews.today
Arla Foods has re-evaluated its plans to acquire a stake in Domty after the latter announced a demerger, focusing instead on potential dairy assets.
Arla Foods has expressed its interest in the dairy assets held by Arabian Food Industries, which plans to split into two entities. A 'non-binding offer' from Arla for a majority stake in Arabian Food Industries, also known as Domty, is off after the Egyptian group decided to separate in two.
However, the Danish dairy giant said it would hold talks with Domty over its dairy assets. In October, Arla put forward a proposed bid to buy a majority stake in Domty. At the time, the Lurpak owner said the offer was 'non-binding' with the company underlining it was 'looking at the details' before deciding whether to proceed with a firm bid. However, Arla said today Domty’s decision had changed its position.
“At the expiration of the due diligence period, Arabian Food Industries Company has announced its plan to separate the company into two entities. Arla Foods now withdraws the non-binding offer made for the share majority of the entire business and instead explores a potential deal for the entity that owns the dairy business once Domty has successfully completed the demerger,” Kim Villadsen, the SVP for Arla’s business in the Middle East and north Africa, said. “Both companies have agreed to continue the positive and constructive dialogue we have had so far while this process takes place.”
As well as dairy products, Domty markets juices and bakery items. In 2024, the company generated sales of E£9.2bn ($180.4m), up from E£7.5bn a year earlier. Its net profit after tax stood at E£501.2m, versus E£454.4m in 2023. Last week, Arla announced plans to merge with German dairy cooperative DMK Group, forming an entity of more than 12,000 farmers across seven countries.
The pair said in a joint statement the deal will create 'the largest dairy cooperative in Europe,' with members in Denmark, Sweden, the UK, Germany, Belgium, Luxembourg, and the Netherlands. The merger is subject to regulatory approval and the backing of the board of representatives in both cooperatives in June. It could bring a combined pro-forma revenue of €19bn ($20.75bn) to the new entity, which will carry the Arla name and be headquartered in Viby J, Denmark.
However, the Danish dairy giant said it would hold talks with Domty over its dairy assets. In October, Arla put forward a proposed bid to buy a majority stake in Domty. At the time, the Lurpak owner said the offer was 'non-binding' with the company underlining it was 'looking at the details' before deciding whether to proceed with a firm bid. However, Arla said today Domty’s decision had changed its position.
“At the expiration of the due diligence period, Arabian Food Industries Company has announced its plan to separate the company into two entities. Arla Foods now withdraws the non-binding offer made for the share majority of the entire business and instead explores a potential deal for the entity that owns the dairy business once Domty has successfully completed the demerger,” Kim Villadsen, the SVP for Arla’s business in the Middle East and north Africa, said. “Both companies have agreed to continue the positive and constructive dialogue we have had so far while this process takes place.”
As well as dairy products, Domty markets juices and bakery items. In 2024, the company generated sales of E£9.2bn ($180.4m), up from E£7.5bn a year earlier. Its net profit after tax stood at E£501.2m, versus E£454.4m in 2023. Last week, Arla announced plans to merge with German dairy cooperative DMK Group, forming an entity of more than 12,000 farmers across seven countries.
The pair said in a joint statement the deal will create 'the largest dairy cooperative in Europe,' with members in Denmark, Sweden, the UK, Germany, Belgium, Luxembourg, and the Netherlands. The merger is subject to regulatory approval and the backing of the board of representatives in both cooperatives in June. It could bring a combined pro-forma revenue of €19bn ($20.75bn) to the new entity, which will carry the Arla name and be headquartered in Viby J, Denmark.
