Arla Foods adjusts strategy as Domty plans business split

EGYPT – Arla Foods, a Danish dairy giant, has shifted its acquisition approach toward Arabian Food Industries, widely known as Domty, following the Egyptian company’s decision to split into two separate entities.

 Arla initially made a non-binding offer to acquire a majority stake in Domty, a prominent player in Egypt’s food and beverage sector, particularly recognized for its cheese and dairy products. 

However, Domty’s announcement to divide its operations prompted Arla to reconsider its strategy.

According to a statement from Arla, the company has withdrawn its original offer for the entire business. 

Instead, it now aims to pursue a potential deal focused solely on the entity that will manage Domty’s dairy operations after the demerger is complete. 

“We are exploring opportunities to engage with the dairy-focused entity once the separation is finalized,” said Kim Villadsen, Arla’s Senior Vice President for the Middle East and North Africa. 

Domty’s decision to split aims to enhance operational efficiency and unlock value for shareholders. 

The move will separate its dairy business from other food operations, allowing each entity to focus on distinct market segments. 

Arla’s revised strategy indicates confidence in the potential of Domty’s dairy segment, which includes popular brands like Damaty and Bravo cheeses, staples in Egyptian households.

Arla’s interest in Domty comes amid its broader expansion efforts in the Middle East and North Africa, a region with rising demand for dairy products. 

The company, known for brands like Lurpak and Puck, sees Egypt as a key market due to its large population and increasing consumer spending. 

“Egypt offers significant growth opportunities, and we remain committed to delivering high-quality dairy products here,” Villadsen added.

The demerger process is expected to take several months, with no specific timeline confirmed. Industry analysts suggest that Arla’s cautious approach allows it to assess the financial health of the new dairy entity before finalizing any deal. 

Meanwhile, Domty’s shares have shown stability on the Egyptian Stock Exchange, reflecting investor optimism about the restructuring.

This development follows Arla’s recent announcement of a US$20.75 billion merger with Germany’s DMK Group, creating Europe’s largest dairy cooperative. 

Despite its global ambitions, Arla remains focused on strategic acquisitions like Domty to bolster its regional footprint. 

As the Egyptian company moves toward its split, Arla’s next steps will be closely watched by industry observers.

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