Domty plans to exclude its bakery division from Arla’s US$176M acquisition deal

EGYPT – The Arabian Food Industries Company (Domty) has announced its intention to exclude its newly established baked goods division from Arla Foods’ acquisition offer, which is valued at US$176 million for the majority of Domty’s shares.

This decision to exempt the baked goods division is significant, as it was the most profitable segment among Domty’s three product divisions in 2024, contributing to a gross profit margin of 25.5% of its total segment sales, valued at EGP 1.9 billion (US$36M).

While Domty’s major shareholders plan to sell their shares entirely, the El Damaty family, current owners, are expected to retain a portion of their holdings, with Mohamed El Damaty continuing as CEO.

The offer is still subject to satisfactory due diligence, definitive contracts, and corporate as well as regulatory approvals. Additionally, Egypt’s Financial Regulatory Authority has extended Arla’s due diligence period by 60 working days, starting on January 9.

“The dairy market in Egypt is substantial. Domty is a leading player in that market, and the company aligns well with our strategy in Egypt. We are currently reviewing the details before deciding whether to proceed with the acquisition,” said Kim Villadsen, Senior Vice President for MENA at Arla Foods.

If successful, Arla Foods plans to delist Domty from the stock exchange. Ongoing negotiations may lead to adjustments in the offer price if Arla Foods agrees to acquire Domty without the bakery division.

In September 2022, Expedition Investments, based in Mauritius, and other investors acquired approximately 33% of Domty’s shares.

The company’s ownership is structured as follows: 32.91% for Expedition Investments, 24.61% for International Dairy Investment, 15.65% for Yahya Mohammed Awad Bin Laden, and 11.53% for Trevi Holding.

Arla Foods Group, a Swedish-Danish multinational cooperative based in Viby, Denmark, is the fourth-largest dairy company in the world by milk volume and the seventh by turnover.

The company was formed on April 17, 2000, through a merger between the Swedish dairy cooperative Arla and the Danish dairy company MD Foods.

Arla develops and manufactures a range of milk-based ingredients, primarily focusing on functional and nutritional milk proteins, bioactive phospholipids, minerals, permeate, and lactose for the food industry.

Founded in 1990, Domty manufactures, markets, and distributes a variety of branded white and processed cheeses, as well as juice products.

The company has recently expanded its offerings to include a bakery range and is a household name in Egypt, holding the number one market position in the local cheese market and experiencing growth in the juice segment.

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