Arla Foods to expand in MENA with offer to acquire Egypt’s Domty

EGYPT – Arla Foods has submitted a non-binding offer to acquire the majority of shares in the Arabian Food Industries Company (Domty), a major Egyptian dairy and juice producer. 

The offer, made on October 15, 2024, proposes a purchase price of 31.48 EGP per share, valuing the company at US$183 million. 

While Arla intends to delist Domty from the Egyptian stock exchange, the current owners, the El Damaty family, are expected to retain a stake, with Mohamed El Damaty continuing as CEO. The offer is contingent on due diligence, regulatory, and corporate approvals.

Domty, with around 4,000 employees and two production sites in Egypt, is a significant player in the country’s dairy market. 

This acquisition aligns with Arla Foods’ strategy of expanding its footprint in the Middle East and North Africa (MENA) region, which has become the company’s largest commercial area outside Europe.

In 2023, Arla generated €996 million in revenue from MENA, a 3.2% increase from the previous year. The company’s Puck brand, its largest in the region, saw nearly 7% volume growth, while its overall foodservice volumes in MENA grew by almost 13%.

Kim Villadsen, Senior Vice President for MENA at Arla Foods, emphasized the importance of Egypt to Arla’s regional strategy.

“The dairy market in Egypt is substantial, and Domty is well-aligned with our strategy,” said Villadsen. 

“Expanding into Egypt is a natural step in our journey to better serve MENA consumers, reinforcing our commitment to regional production and delivering high-quality dairy products tailored to local preferences.”

This acquisition would further strengthen Arla’s MENA presence, a region where it has long been established. 

However, the company’s performance in other parts of Africa, such as West Africa, has been less favorable. Arla’s revenues in West Africa fell by 18.8% to €127 million in 2023, largely due to the devaluation of the Nigerian naira.

In addition to expanding its dairy operations, Arla has been restructuring its business, particularly in early life nutrition (ELN). 

The company recently announced plans to increase production of ELN ingredients by transforming its Arinco facility in Denmark into a dedicated ingredients production site. 

However, this shift will lead to the discontinuation of Arla’s B2B ELN division over the next 19 months, potentially resulting in job losses. 

Arla’s focus on branded ELN products will continue, as the company expects demand in this category to grow.

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