Almarai, Mead Johnson set up baby food JV
Riyadh, March 31, 2010
Saudi Arabia's Almarai Co said it will partner with US baby formula maker Mead Johnson Nutrition Co to make baby food products in the Gulf region.
'The joint venture, which will be held 50 percent by Almarai, will draw on the two partners' complementary brands and capabilities,' Almarai, the Gulf's largest dairy company by market value, said in a bourse statement.
The joint venture is expected to start production in 2011, the statement said, without giving the value of the deal. 'This venture offers us a great entry point into the (Gulf), a market we had prioritized because of its size and attractive demographics - with strong birth rates, above-average income levels and excellent potential for growth,' said Steve Golsby, president and CEO of Mead Johnson, on the company website.
'The JV will benefit from Mead Johnson's product knowledge, while Almarai can easily bring to the table its local market understanding, its dairy supply, and to a certain extent, its distribution network capabilities,' said Laurent-Patrick Gally, equity researcher at Shuaa Capital, in a statement.
Almarai, which has been diversifying its sources of revenue through acquisitions, recently acquired two companies in the Middle East and is looking at more opportunities in Egypt, after spending $115 million last year to buy an Egyptian dairy firm.
Almarai is also involved in joint ventures with Greece-based Vivartia, in the bakery business, and Pepsico, for dairy and fruit juice products. -Reuters