Japanese dairy giant looks to enhance stake in Pakistan's NutriCo Morinaga for $56.6mn
Japanese dairy giant Morinaga Milk Industry has sent a conditional offer to ICI Pakistan to acquire an aggregate of approximately 33.3% of the issued and paid-up share capital of NutriCo Morinaga (Private) Limited (NMPL), a subsidiary of ICI Pakistan, from NMPL's existing shareholders including that of ICI Pakistan.
The acquisition is set at an aggregate price of $56.6 million which translates to approximately $2.07/- per share, said ICI Pakistan in its notice sent to the Pakistan Stock Exchange (PSX) on Thursday.
NMPL was a joint venture between ICI Pakistan, Morinaga Milk and Unibrands (Private) Limited to locally manufacture and distribute nutritional formula products, and was recently merged with NutriCo Pakistan (Private) Limited, which was involved in the import and distribution of select products of Morinaga Milk.
The notice read that the Board of Directors of ICI Pakistan has granted an in-principle approval to ICI Pakistan to move forward with the proposed sale/ divestment of 26.5% of its shareholding in NMPL (i.e. partial divestment) to Morinaga Milk, subject to, inter alia, valuation of NMPL and the finalization of definitive agreements, to be presented to the Board of Directors for formal/final approval, if deemed fit by the Board.
ICI Pakistan has also been authorized to enter into a memorandum of understanding for the proposed transaction.
“The offer from Morinaga Milk is a testament to Morinaga Milk's confidence in the Pakistan market and the potential of NMPL to grow and cater to the growing nutritional needs of the children of Pakistan,” read the notice.
“As the owners of the ‘Morinaga' brand, know-how to manufacture the products along with its superior research & development facilities, Morinaga Milk is well-equipped to accelerate the growth of NMPL with the support of ICI Pakistan as a continuing joint venture partner (which shall continue to hold approximately 24.5% of the share capital of NMPL upon the completion of the proposed transaction),” it said.
Moreover, Moringa Milk Industry in its filing to the Tokyo Stock Exchange on Thursday said that the company has been exporting infant and toddler milk to Pakistan since 1978 and sees the South Asian country as an attractive market, boasting the fifth-largest population in the world, with continuing population growth forecast.
“Moreover, the Morinaga Milk Industry brand has gained broad recognition in Pakistan over many years through the export business, giving the Company a high chance of achieving further rapid growth in the Pakistan market.
“By acquiring management control over NutriCo Morinaga ... the company considers that it will be able to capture growth opportunities, leading to the further development of the Morinaga Milk Industry brand infant and toddler milk business in Pakistan and contributing to the growth and health of the consumers of the Company products,” it said.
Back in 2020, NutriCo Morinaga (Private) Limited commenced commercial operations of growing-up formula products at its manufacturing facility in Sheikhupura, Punjab.
At a cost of Rs5.5 billion, the manufacturing facility was the first asset investment by a global Japanese dairy and food company in Pakistan.
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