The largest dairy cooperative in the world, Royal FreislandCampina NV is planning to acquire a 51% stake in Pakistan’s Engro Foods, the second biggest listed dairy company in the country, in a deal valued at approximately $460 million, according to The Express Tribune.

 

The Dutch dairy giant approached Engro Foods to negotiate the purchase of approximately 391 million shares from its parent company, Engro Corp. according to a stock exchange filing issued by Engro on March 3. Based on the company’s current valuation, the deal could be worth between $460 million and $500 million.

 

Upon completion, a deal of this scale will help bring Pakistan to the attention of foreign investors. “Pakistan is already in the radar range of the world corporate sector and this deal further lifts its image outside,” said Faisal Shaji, head of research at Standard Capital Securities, according to Tech Juice.

 

In addition, it will boost Pakistan’s financial statistics at a time of low oil prices, and as foreign direct investment in the country has been down by 57% to $336 million in the current financial year compared to the same time period last year.

 

For Royal FreislandCampina, the deal would give the company a foothold in a country in the rapidly growing Southeast Asian market where the middle class is turning away from boiling raw milk before drinking it to purchasing more processed dairy products. Currently only 9% of all milk sold in tPakistan is processed, however, this number is expected to climb to as high as 15% within five years, Engro Foods chief executive officer Babar Sultan said in an interview reported by Bloomberg in December.

 

“The potential is huge and an untapped market exists when it comes to processed milk,” Danish Ali Kazmi, senior research analyst at Alfalah Securities Ltd told Bloomberg.  The deal will provide “FrieslandCampina with a lucrative opportunity to capture the market."