Numico to buy EAC babyfood, expands in Asia

By Dominique Patton

- Last updated on GMT

Related tags Business Marketing Baby food

Numico, Europe's leading babyfood company, will become the number
two player in Asia through a €1.2 billion deal to acquire East
Asiatic Co's nutrition businesses.

EAC is currently the babyfood market leader in China, Malaysia and Thailand, offering Numico a good fit with its existing Asia-Pacific business in Indonesia, Australia and New Zealand.

Moreover, the Asian market will give the Dutch company "an important new source of long-term growth"​, according to CEO Jan Bennink, allowing it to sustain its current quarterly double-digit sales increases.

Last week Numico raised its 2005 sales forecast for the second time this year, after reporting a 14 per cent rise in sales from its babyfood brands during the third quarter. Much of the growth is coming from outside the mature western European markets, and like other leading infant nutrition companies, Numico is looking east to fast-growing demand for baby products.

"The Asian infant nutrition market forms a significant and sustainable opportunity characterised by a very low per capita consumption, a high number of births and increasing GDP per capita, offering ample growth opportunities,"​ it said in a statement.

EAC Nutrition, which makes the Dumex brands, has a volume-based market share of 17 per cent in China, 30 per cent in Thailand and 18 per cent in Malaysia.

Net sales by EAC in these three markets increased 35.8 per cent to €88 million in the third quarter.

In China, the largest nutrition market in Asia, its sales climbed 63 per cent during this period.

EAC's other businesses, in the Philippines and India, will be put "under consideration", said Numico, and it will also divest the Chinese infant cereal company Hangzhou Future.

The acquisition will be partly funded by the sale of new shares in an accelerated book-built offering launched today.

A one-time charge of €35 million will pay for measures decided in the review of the non-core businesses and integration of the key activities. The EAC business will be run as a separate division of the Dutch group.

Numico says the deal will boost profit from 2007.

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