Over the last few months the scramble for Egyptian food makers has heated up. International conglomerates like Abraaj and Kellogg Co have moved beyond tendering interest to tabling multiple, counter offers for Bisco Misr – the country’s largest sweet snack maker. This has spilled into what is now considered one of the biggest bidding wars experienced in the Egyptian business space.
A Cairo based equity firm, Pioneer holdings, Saudi Arabian firm Arrow Food Distribution, French Lactalis and Danish Arla have also been in a heated race to acquire Egypt’s cheese company Arab Diary.
Bidding war
Since mid 2014, when the bidding window for Bisco Misr was announced, the process has quickly metamorphosed into a full blown war battle. During this period Kellogg has topped Abraaj’s offer twice, the last offers valuing the company at LE 948.4 million ($97.6 million) topping that of Abraaj by two percent.
The same fate befell Arab Diary, as French Lactalis, Danish Arla and other investors have been locked in a battle to acquire the company. So far, Lactalis leads the bid process. Recently, Arla announced it was backing out of the bid to acquire the company after a due diligence forced its decision, leaving only Lactalis and Pioneer holdings in the race.
Why These Companies?
Bisco Misr is a is Egypt’s largest sweet snack maker with over 90 brands under its product portfolio. This extensive array of products allows any investor to penetrate the entire spectrum of the country’s food industry, ensuring a greater influence on market forces – demand and supply – as well as the industry value chain – material providers, to suppliers, retailers and consumers.
Egypt is also the Northern African region’s biggest economy, ranking third on the continent. This gives firms like Abraaj and Kellogg Co an undue advantage in furthering their African push. Abraaj, keen to deepen its footprints within Africa’s consumer goods market, following acquisitions in Nigeria and Kenya – both leading economies of West and East Africa respectively – will further consolidate its position as one of the continent’s emerging investors, and will add North Africa to the other regions it is keen to hold significant dominance.
Bisco Misr currently operates three large facilities in Egypt, an attractive asset base for any investor. It has one in Cairo where it produces energy boosting date bar, Datto, and other confectioneries and two others in Alexandria. Such assets can help Abraaj or Kellogg easily expand across the Middle Eastern and Nothern African (MENA) region.
Same goes for Arab Dairy whose leading cheese brand, Panda, is exported to countries within the MENA region. Europe’s Lactalis is keen on the acquisition as it seeks to grow its presence with this region, which apparently accounts for a significant portion of its total sales.
The battle to acquire these companies is a sign that the financial market of Egypt is seeing some revival after four years of turmoil, which temporarily grounded business activities in Egypt. It is also a sign that investors’ confidence in the country has improved immensely.
