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Wed 31 Mar 2010 12:11 AM

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Mead Johnson and Almarai set up baby food joint venture

Joint venture expected to start production in 2011, no value of deal given.

Mead Johnson and Almarai set up baby food joint venture
JOINT VENTURE: Saudis Almarai Co said that it would be partnering with US baby formula maker Mead Johnson to make baby food products in the Gulf Arab region. (Getty Images)

Saudi Arabia's Almarai Co said on Tuesday it will partner with US baby formula maker Mead Johnson Nutrition Co to make baby food products in the Gulf Arab region.

In a bourse statement, the Gulf's largest dairy company, Almarai said: "The joint venture, which will be held 50 percent by Almarai, will draw on the two partners' complementary brands and capabilities."

The joint venture is expected to start production in 2011, the statement said, without giving the value of the deal.

On the company website, Steve Golsby, president and CEO, Mead Johnson, said: "This venture offers us a great entry point into the (Gulf), a market we had prioritized because of its size and attractive demographics - with strong birth rates, above average income levels and excellent potential for growth."

In a statement, Laurent Patrick Gally, equity researcher, Shuaa Capital, said: "The JV will benefit from Mead Johnson's product knowledge, while Almarai can easily bring to the table its local market understanding, its dairy supply, and to a certain extent, its distribution network capabilities."

Almarai, which has been diversifying its sources of revenue through acquisitions, recently acquired two companies in the Middle East and is looking at more opportunities in Egypt, after spending $115 million last year to buy an Egyptian dairy firm.

Almarai is also involved in joint ventures with Greece based Vivartia, in the bakery business, and Pepsico, for dairy and fruit juice products.

Almarai's shares closed up 1.9 percent earlier on Tuesday, outperforming the bourse index which gained 0.7 percent. (Reuters)

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