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Seven non-binding indicative bids received for 'Dalda'

KARACHI (February 12 2004): Unilever Pakistan Ltd has received seven non-binding indicative bids from local as well as international companies to acquire 'Dalda business' which was running into loss because of substandard food oil in the market and its smuggling.

According to sources close to the company, seven companies have submitted non-binding bids for Dalda business.

Habib Oil has offered Rs 135 million, Candyland Rs 129 million, Proctor & Gamble Rs 123 million, DNATA Group Rs 123 million, Evian Fats and Oils Rs 120 million, SNOLA of Saudia Arabia Rs 112 million and Lakson Group Rs 111 million.

Besides these interested parties, Indus Motors, ISCO of Dubai, and Kissan Fruit products have shown interest to acquire the Unilever food oil business.

Evian, the only edible oil refinery in Pakistan, has shown immense interest in purchasing the stake in Dalda business for vertical integration.

The last date for bids from prospective buyers was January 15, which was later extended to January 22. Hong Kong Shanghai Banking Corporation is the financial adviser to help Unilever sell its 'Dalda business'.

According to an analyst, Unilever globally has moved out of edible oil business. The group has been restructuring its brands since 2000 and has brought down their number to around 400 from over 1600 where lagging brands were taking the kick.

In June 2003, Hindustan Lever also divested its edible oil and fats business in India and Nepal to the US-based global agribusiness company 'Bunge' for 900 million Indian rupees.

Sarwat Fatima, research analyst from Elixir Securities, said that revenues from spread and cooking contribute about 16.8 percent of the total revenue of the company. Due to the low volumetric sales of Dalda, the operating profit of this segment dropped by almost 96.5 percent during last three quarters due to the operating loss in Dalda.

“We are of the opinion that with Dalda being separated from Unliver accounts, impact on the bottom line of the company should be positive in long term. However, in the immediate term, shareholders will benefit from additional cash dividends,” she said.

“The estimated value of Dalda assets is about Rs 767 million. With substantial brand equity, we expect Unilever should get about Rs 900 million to Rs 1,000 million,” she added.

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