Arla Foods has issued a preliminary bid of 65 Egyptian pounds per share for Cairo-based Arab Dairy Products as it expands into emerging market regions. A formal bid will be issued upon the completion of due diligence of Arab Dairy Products and approval by the Arla board. Last month, Middle Eastern investment group Pioneer Holdings which is a top shareholders in Arab Dairy Products, announced a bid of 56 Egyptian pounds per share for the company, and Arla’s bid could indeed begin a bidding war for Arab Dairy. Arla is looking to expand beyond its Western European market knowing that when milk quotas are removed next year milk volumes will soar in a market with limited consumption growth potential. Eighty percent of the milk powder used by Arab Dairy Products for production is imported to Egypt, making it an ideal destination for Arla’s milk. Global raw milk prices are heading downward, but Arla points out that sales are rising 22% in the Middle East and Africa, and are increasing at a rate of 251% in China.
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