CAIRO: Saudi Arabia’s Almarai and the multinational PepsiCo are in the process of acquiring 70 percent of the Egypt-based International Company for Agro-Industrial Projects (Beyti), local news reported.
Dairy and Juice International Limited, an investment company formed earlier this year by Almarai and Pepsi, will buy at least 70 percent of Beyti.
The deal, which is set to be finalized within days, will be the largest acquisition on Egypt’s market in 2009.
Hatem Saleh, managing director of Beyti, told local media that the Almarai-Pepsi acquisition aims to increase product sales in markets where Egypt has trade agreements.
Both sides have been in negotiations since August 2008 when Almarai first announced that it has signed an initial contract to acquire a majority stake in Beyti.
Beyti is owned by prominent businessman Mohamed Sheta and has been operating in the Egyptian market since July 2002. The company has an “18 to 20 percent market share of milk and between 10 and 12 percent of yogurt, said Yasmine El-Abany, Beyti’s marketing director.
“Beyti produces between 15,000 to 20,000 tons of milk annually out of the total of 106,000 tons produced in Egypt, and approximately 7,000 tons of yogurt, El-Abany added.
Beyti is ranked number two in milk production in Egypt, according to El-Abany, after leader Juhayna and followed by Enjoy.
Egypt’s milk production market grew 10 percent in the last four years, with the yogurt market growing at approximately 19 percent, said El-Abany, especially with “newcomers like Danone and Lactel.
The local market is still defined “as a virgin market so there is always rooms for growth with the growing population, El-Abany added.
According to Yousry Al-Tinawy, general manager of the Chamber of Food Industries, there are now 321 dairy companies operating in the sector.
When the deal is finalized, PepsiCo will take over marketing operations and Almarai will handle production activities.
In February, Almarai and Pepsi established a company to keep a lookout for investment opportunities in dairy products and juices under the name Dairy and Juice International Limited. PepsiCo owns 52 percent and Almarai has a 48 percent stake in the investment company.
Saad Abdul Latif, president of PepsiCo in the Middle East, said in a television interview that the aim of foraying into diary production is to offer consumers something different.
“The strategy is to diversify PepsiCo [and produce] all consumer beverages including milk, Abdul Latif told Al-Arabiya channel.
Dairy and Juice international Limited will focus on investment opportunities in Southeast Asia, Africa and the Middle East. This will be the company’s first deal.
Abdel Fattah El-Gebaly, economic expert at Al-Ahram Center for Political and Strategic Studies, told Daily News Egypt that the deal sends a positive message that the Egyptian market is attractive for foreign direct investment despite the effects of the global economic crisis.
At the same time, El-Gebaly raised concerns that the two major players in the sector may control the local dairy market.