Royal FrieslandCampina N.V. , the leading dairy company in the Netherlands, purchased a controlling interest in Alaska Milk Corporation [AMC], one of the largest dairy companies in the Philippines and listed on the Philippine Stock Exchange. FrieslandCampina is increasing its stake from about 8.1% to 68.9% via a purchase of 535.7 million shares held by the Uytengsu Family, the founders and controlling shareholders of AMC, at a price per share of up to PHP 24.00, subject to certain pre-closing adjustments. In compliance with regulatory requirements, FrieslandCampina will launch a tender offer for the remaining outstanding publicly traded shares at an identical price. Mr. Wilfred Steven Uytengsu will continue to lead AMC’s management team as President and Chief Executive Officer and will remain a director of the company. With this acquisition FrieslandCampina adds a market of approximately 100 million consumers to its existing consumer base.
This transaction will strengthen FrieslandCampina’s position in Asia, which is a strategic growth area for the dairy multinational. FrieslandCampina is already present in Thailand, Indonesia, Malaysia, China, Vietnam, India, Hong Kong and Singapore. FrieslandCampina’s Consumer Products International, that also produces and sells dairy products in the Middle East and Africa (in particular in Nigeria and surrounding countries), annual global revenues will increase from approximately EUR 2.5 billion to nearly EUR 2.7 billion. This acquisition likewise provides the company with a platform matches its strategic route2020 goals.
With annual revenues of over EUR 200 million, AMC has emerged as the leading player in the Philippine milk industry. For over thirty years it has displayed strong growth, consistent brand leadership in the canned liquid milk category and a strong and growing position in powdered milk. It has also recently expanded into higher value-added milk products, particularly in the Ready-to-Drink milk category. The company employs about a thousand people and has a production facility in San Pedro, Laguna.
Cees ‘t Hart, Chief Executive Officer of Royal FrieslandCampina said: “Adding AMC gives us a strong, high-growth platform in the Philippines and access to a market of around 100 million customers. It also confirms our international ambition to enter markets where FrieslandCampina can create value. AMC’s management has already built up an outstanding position in the Philippine market. Together we can expand this position by introducing tried and tested FrieslandCampina concepts that have been successful in other parts of the world.”
Wilfred Steven Uytengsu, President and Chief Executive Officer of AMC said: “We expect this historical agreement to propel AMC to its next stage of growth and that the products developed by FrieslandCampina will strengthen our positions in all dairy categories. The intended integration will provide AMC with access to an international dairy company that has production plants in 25 countries and with products that are sold in over 100 countries worldwide. Most notably, FrieslandCampina’s growing commitment to the Philippines is a vote of confidence for our country and its bright prospects.”
In compliance with regulatory requirements, FrieslandCampina will launch a tender offer for the remaining outstanding publicly traded shares of AMC which currently amount to approximately 276.7 million shares, at a per share price identical to that of the FrieslandCampina’s final purchase price. FrieslandCampina will fund the transaction through short-term debt financing, preserving balance sheet flexibility. The transaction is expected to close around May 2012 and is subject to customary closing conditions, including receipt of certain regulatory approvals.
Key attributes of the company
- AMC’s brands rank first and second among food and beverage companies operating in the Philippines, with approximately EUR 200 million in revenues
- In the Philippines, FrieslandCampina will employ approximately 1,000 people and has one manufacturing facility, making the organisation the leading milk company in the country
- AMC delivered autonomous growth of 9%, between 1999-2010
- AMC posted average double digit EBIT margins since 2001
- AMC will offer FrieslandCampina the opportunity to valorise member milk in certain product categories
Key attributes of the Philippine market
- The Philippine market has about 100 million consumers
- The country has about 54 ethnic groups with nearly 100 languages
- Population is 82% Roman Catholic, 9% Protestant, 5% Muslim and 3% Buddhist
- Young population: average age is about 23 years
- Population growth is high at over 2%
- IMF predicts until 2015:
- Sustained positive current account balance
- Inflation in the 3 to 5% range per year
- Real GDP growth of 4 to 5% per year
- Domestic dairy production is low at circa 1% of domestic consumption.
FrieslandCampina was advised by J.P. Morgan (S.E.A.) Ltd. and the Uytengsu Family was advised by Houlihan Lokey.