Asahi to acquire Etika International’s dairy operations in South-East Asia

Asahi Group Holdings Southeast Asia (AGHSEA), a subsidiary of Japan-based brewer and soft drink maker Asahi Group, has entered into an agreement to acquire Singapore-headquartered Etika International’s dairy and packaging business in South-East Asia for $329m.

As part of the deal, the company will also buy 11 other companies from Etika.

Etika’s dairy business, based Kuala Lumpur, Malaysia, engages in the manufacturing, marketing and distribution of condensed milk and UHT milk under the Dairy Champ and Goodday brands, which have wide recognition in the region.

The unit also has a presence in the Vietnamese and Indonesian markets, and exports products to other countries in South-East Asia, the Middle East and Africa.

The acquisition is expected to strengthen the company’s beverage business platform in South-East Asia.

In Malaysia and other South-East Asian countries, dairy products, including condensed milk, are deeply ingrained in the food and beverage culture, and stable growth of the dairy market is expected over the coming years, according to Asahi.

The transaction is scheduled to close around the end of June, and is not expected to have any material impact on Asahi’s non-consolidated or consolidated results for the fiscal 2014.

Etika International said that the proposed disposal allows the company to unlock value in the business and consequently maximise returns to its shareholders.

The company plans to use the proceeds to pay bank borrowings, finance the growth of the remaining businesses and to capitalise on other business opportunities to enhance long-term value for shareholders.

Etika International also operates in frozen foods, nutrition foods, non-alcoholic beverage and restaurant chain businesses.