Alaska Milk bares partnership with Campina

MANILA, Philippines - Alaska Milk Corp. (AMC), the largest milk company in the Philippines listed on the Philippine Stock Exchange, announced a stronger partnership with Royal Friesland Campina (RFC), the leading dairy company in the Netherlands with sales of almost €9 billion and with 19,000 employees operating in 25 countries.

The predecessor entity to RFC was the original foreign partner with the Uytengsu milk business in 1972 and their increased investment in AMC is part of the group’s goal to build the business in the Philippines and the region.

Royal Friesland Campina is increasing its stake from about 8.1 percent to 68.9 percent via a purchase of the shares held and controlled by the Uytengsu Family, the founders and controlling shareholders of Alaska Milk Corp. In compliance with regulatory requirements, Friesland Campina will launch a tender offer for the remaining outstanding publicly traded shares.

Wilfred Steven Uytengsu will continue to lead Alaska Milk’s management team as president and chief executive officer and will continue as a director of the company.

With this acquisition Friesland Campina adds a market of approximately 100 million consumers to its existing consumers’ base.

This transaction strengthens Friesland Campina’s position in Asia, which is a strategic growth area for the dairy multinational. Friesland Campina is already present in Thailand, Indonesia, Malaysia, China, Vietnam, India, Hong Kong and Singapore.

It raises Friesland Campina’s consumer products International annual global revenues from approximately €2.5 billion to early €2.7 billion.

This acquisition likewise provides the company with a platform that fits into its strategic “ route2020goals ” .

With annual revenues of over P12 billion, Alaska Milk has emerged as one of only two major players in the Philippine dairy industry. For 40 years it has displayed a strong growth, consistent brand leadership in the liquid canned milk category and a strong and growing position in powdered milk. It has also recently expanded into higher value-added milk products, particularly in the Ready-to-Drink milk category. The company employs over one thousand people and operates a manufacturing facility in San Pedro, Laguna.

In the three-year period ending 2011, AMC’s stock price increased by 53 percent compounded annually compared to the PSE index’ 33-percent annual growth over the same period while the company’s cash dividend yield averaged 5.4 percent.

Yesterday, AMC shares surged 25 percent to close at a record P20 at the Philippine Stock Exchange.

Uytengsu, president and chief executive officer of Alaska Milk said: “We expect this historical agreement to propel our company to its next stage of growth. We expect the product concepts developed by Friesland Campina to strengthen our positions in all dairy categories. In the future, integration provides Alaska Milk access to an international dairy company that has production plants in 25 countries and with products that are sold in over 100 countries worldwide. Most notably, Friesland Campina’s growing commitment to the Philippines is a vote of confidence for our country and its bright prospects.”

Cees‘t Hart, chief executive officer of Royal Friesland Campina said: “Adding Alaska Milk gives us a strong, high-growth platform in the Philippines and gives us access to a market of about 100 million customers. It also confirms our international aspiration and determination in entering markets similar to various other Asian countries where Friesland Campina’s capabilities can create value. Alaska Milk’s ambition to build a value – added dairy business fits the objectives of Friesland Campina. AMC’s management has already built up an outstanding position in the Philippine market. Together, we can expand this position by introducing proven Friesland Campina - concepts that have worked in other parts of the world.”

In compliance with regulatory requirements, Royal Friesland Campina will launch a tender offer for the remaining outstanding publicly traded shares at an identical at a price per share of up to P24, subject to certain pre-closing adjustments. The transaction will be funded by Friesland Campina through a short-term debt financing, preserving balance sheet flexibility. The transaction is expected to close around May 2012 and is subject to customary closing conditions, including receipt of certain regulatory approvals.

Friesland Campina was advised by J.P. Morgan (S.E.A.) Ltd. and the Uytengsu Family was advised by Houlihan Lokey.