Qalaa sells off F&B assets in $10m deal

16-Dec-2015 - Last updated on 16-Dec-2015 at 22:00 GMT

Egypt’s Qalaa Holdings has sold a mothballed cheese company and the Sudanese division of its sweets producer in deals totalling almost US$10m, the group announced this month.

Qalaa’s agribusiness division Gozour sold cheese producer Misr October for Food Industries – commonly known as El-Misreen – for around US$6.4m, to the Hagag Group, an Egyptian F&B investment firm. As part of the deal Hagag will take on responsibility for around US$2.1m in bank debt and other liabilities assigned to El-Misreen, which Qalaa shut down as a going concern in 2012.

‘Investors need to grow businesses’

Of the deal to buy El-Misreen, Kamal Hagag, founder and chairman of the Hagag Group, said: “It is time for all the Egyptian investors to invest and grow their businesses. The F&B industry has high growth potential that is incomparable to anywhere else in the MENA region. Egypt needs all national investors in all sectors to invest and grow their business in order to positively contribute to the growth of the Egyptian economy.”

Sherif Abdelaal, managing director and head of Investment banking for Pharos Holding, which advised Qalaa on the sale, said: “We presented a compelling investment case for El-Misreen primarily based on its existent production capabilities and strong brand equity.

“The El-Misreen transaction continues to underscore the strong investment appetite of local strategic players in Egypt looking to gain market access and enter new sectors within the F&B industry like Mr Kamal Hagag,” he added.

“This transaction reflects the attractiveness of the Egyptian dairy sector. This is the second transaction this year in the dairy sector, after we successfully completed the sale of Arab Dairy,” said Pharos founder and chairman Mohamed Taymour.

Sweets for sale

Gozour also sold its two Sudanese halawa and biscuit plants, under the RIS brand, to an unnamed Sudanese investor for US$4.3m. Qalaa said both sales were part of its long-term strategy to divest non-core businesses.

Both of this month’s deals are dwarfed by the sale of confectionery maker Rashidi El Mizan, which completed last month for a total of around US$64m. After a bid from Saudi sweet maker Halwani Brothers and speculated interest from Almarai and Savola, it was another bidder from the kingdom, Olayan Financing Company, which clinched the deal.

Qalaa is still looking to offload Dina Farms, Egypt’s largest private dairy firm. Earlier this year the group said Dina Farms and Rashidi El Mizan together were potentially worth up to US$300m – with the sale of Rashidi El Mizan now complete, Dina Farms alone could fetch more than US$230m, based on Qalaa’s valuation.