FMI is a dairy and fruit juice distribution company with a major distribution network across six West African countries (Ghana, Nigeria, Togo, Burkina Faso, Benin and Cte d'Ivoire). The deal is scheduled for completion by the end of 2013, with Danone gradually taking over a controlling stake in FMI. The website Dairyreporter.com noted that "through the deal, Danone, which has an established presence in South Africa and several Maghreb nations, hopes to develop the dairy product market in West Africa, using Fan Milk's unique business model."
According to the Danone/Abraaj Group joint press release, "the combination of Danone's know-how in the fresh dairy category alongside Abraaj's 20-year investment experience, insights and local presence on the African continent will boost Fan Milk's growth in a market with major potential." Emmanuel Faber, Co-Chief Operating Officer of Danone, commented: "This transaction represents a major step in Danone's expansion in Africa." According to dairy sector analysts, "Africa is becoming a major expansion axis for Danone and [tomorrow it will be] an important growth booster."
The Abraaj Group is a leading Dubai-based private equity investment company operating in emerging markets. In the African dairy sector, the Abraaj Group is already a partner of Brookside Dairy, described in the joint press release as "the largest dairy in East Africa".
FMI, which has its headquarters in Denmark, "relies on a fleet of more than 30,000 street vendors, operating push carts and bicycles, to distribute its growing portfolio of fruit juices and [frozen] dairy products". The company has been present in West Africa since 1960, when the Ghana Milk Company was established, using imported milk powder to manufacture reconstituted dairy products.
Initially FMI distributed reconstituted milk products, but it has since developed its product range to include "yoghurt, ice cream, flavoured milk, drinking yoghurt and juice drinks". The company now has sales of "around 120 million... and has access to around 250 million increasingly affluent customers". FMI's main markets are Nigeria and Ghana, which together account for 80% of sales. According to Reuters reports, FMI "commands a market share of 85 percent and 89 percent respectively in these two countries".