Arla is delivering a non-binding bid for a majority stake in Egypt-based Arab Dairy Products Company (ADPC.ca).

Arab Dairy has a strong position in both the retail and food service. It draws in a revenue of US$88.2 million in 2013, with sales volume at 43,000 tonnes. The company operates eight distribution centers and has a modernised facility, outside Cairo, which produces am output of 80,000 tonnes.

"Arab Dairy's local production is based on recombining, where water is added to milk powder and then processed into cheese. About 80% of this milk powder is imported to Egypt. Consequently, there is considerable potential for using milk, supplied by owners in value-added products, which we can sell in a growing market," said Rasmus Malmbak Kjeldsen, the senior vice-president for Arla's business in the Middle East and Africa.

If Arab Dairy is found to be in a favourable state, Arla will be looking at a possibility at becoming one of the top six players in the Egyptian dairy sector. Arla's acquisition can also give the company a market share of 13-15% in cheese.

Currently ongoing is a due diligence phase where Arla is able to access to detailed information about the more sensitive aspects of Arab Dairy's business, not published in annual reports.