Dairy industry leader Arla Foods is strategically positioning itself to acquire a majority stake in Arabian Food Industries, commonly known as Domty, a significant player in the food and beverage sector of Egypt.
On October 15, Arla made a non-binding offer for Domty, valuing the company at E£8.9 billion ($183 million) based on a price of E£31.48 ($0.64) per share. This move reflects Arla’s intent to strengthen its presence in the burgeoning food and drink business in the Middle East.
Domty employs approximately 4,000 people across two production facilities and achieved sales figures of E£7.5 billion, with a gross profit of E£1.58 billion in 2023. In their announcement, Arla indicated plans to delist Domty’s dairy and juice operations from the Egyptian stock exchange, although the El Damaty family will retain a stake in the company, with Mohamed El Damaty continuing as CEO.
Kim Villadsen, Arla’s Senior Vice President for the Middle East and North Africa operations, stated: “The dairy market in Egypt is substantial; Domty is a leading player in that market, and the company aligns well with our strategic objectives in the region. We are currently assessing the details before deciding on proceeding with the acquisition.”
This proposed acquisition aligns with Arla’s ongoing strategy to expand within the food and beverage industry, particularly as the Middle East and North Africa continue to represent the company’s largest commercial segment outside Europe. In 2023, Arla recorded revenues of €996 million ($1.09 billion) from this region, marking a 3.2% growth compared to the previous year. The overall group revenue also rose to €7.98 billion, reflecting a 2.7% increase from 2022.
In West Africa, however, Arla faced challenges, reporting an 18.8% revenue decline to €127 million ($138.3 million), largely attributed to the devaluation of the Nigerian naira. Nevertheless, Arla’s foodservice volumes in the Middle East and North Africa surged nearly 13%, bolstered by a 7% growth in volumes for its flagship brand, Puck.
Earlier in August, Arla disclosed plans to ramp up production of early life nutrition (ELN) ingredients, although this restructuring, which involves shutting down a B2B division, is likely to generate redundancies.
