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Engro foods to be sold for $460 million in the largest private sector takeover ever

Engro foods
3 minutes read

In the recent business landscape, mergers and acquisitions are a common spell. Numerous large corporations and firms intended to buy or acquire other companies with a goal to diversify their business focus or to gain profitability. Keeping this perspective, a Dutch Multinational Consumer Firm also decided to acquire 51 percent shareholdings in Engro Foods Limited.

FrieslandCampina International Holding BV (Besloten Vennootschap), through its managers at Citibank Pakistan, has issued a Public Announcement of Intention (PAI) to acquire about 391 million voting shares of Engro Corporation in EFOODS. With an investment of around $460 million, the foreign firm is all set to buy Pakistan’s largest dairy firm and would complete the entire due application process in next six to eight months.

Andalib Alavi, company secretary at Engro Corporation said in a notice issued to the Pakistan Stock Exchange,

We have received a public announcement of intention to acquire up to 51 percent of voting shares of Engro Foods (EFOODS) by Friesland Campina International Holding BV.

FrieslandCampina is one of the world’s largest Dutch dairy cooperative with annual revenue of (approximately $12.4 billion) in 2013. The dairy company has more than 19,000 member dairy farmers in the Netherlands, Germany and Belgium. It has offices in 28 countries and employs a total of 21,186 people, supplying products in more than 100 countries worldwide.

Do you know: In 2011, Engro Corporation had a major global diversification with the acquisition of US-based Company, Al Safa Halal which targeted approx. 7 million populations of Muslims in North America. (Source: Wikipedia)

This latest acquisition is considered to be the largest takeover of Pakistani private firm by any foreign firm in the corporate history of the country. The acquiring company is also planning to make a public offer to acquire at least 50% of the free float shares (99 million shares) pursuant to the acquisition.

Different Analysts And Experts Opinions over this Deal:

“The recent intention to acquire EFOODS… lies within the key aims of increasing share of added-value and branded products in the total sales volume,” said Abbas of AHL (Arif Habib Limited) Research.

Analyst Nabeel Khursheed seconded Abbas said that,

The news of a potential strategic sale of Engro Foods has been doing rounds in the business sector for some time, acquisition of majority stake in Engro Foods comes as a major surprise in the backdrop of Engro’s long-term strategic plan of focusing on three key business areas of fertilizer/ agriculture, consumers and energy.

“It is the largest ever deal in the private sector,” said analyst Faisal Shaji, head of research at Standard Capital Securities. He also said that the deal was closely watched by international investors eyeing the emerging South Asian economy, and would boost Pakistan’s Foreign Direct Investment (FDI) statistics.

In Pakistan, foreign direct investment was down by 57 percent for the initial seven months as compared to the last financial year which was ended in June 2015. If the Dutch-ENGROO acquisition finalized, it will surely boost Pakistan’s foreign direct investment statistics.

Moreover, Pakistan is also expecting a 4.5 percent growth in its economy due to the investment related to the China-Pakistan Economic Corridor (CPEC), lowered oil prices, acceleration of credit growth, bright construction activity and planned improvements in the energy supply for the 2015-16 financial year.

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