Uganda's leading milk processing firm, Pearl Dairy Farms, known for its popular Lato brand, is poised to acquire Highland Creamers & Food Limited, a Kenyan dairy company producing the Farmily Milk brand.
The move, subject to approval by the COMESA Competition Commission, aims to strengthen Pearl's market presence, address supply chain challenges, and propel its growth in the East African region.
Maziwa, the non-operating holding company incorporated in Mauritius, has formally applied to acquire a 100 per cent stake in the Kisii-based Highland Creamers & Food Limited.
Pearl Dairy Farms, through its subsidiary Pearl Dairy Farms Limited, handles the collection, processing, and sale of milk and milk products in Uganda.
The acquisition of the Kenyan company is expected to streamline operations and enhance market access in western Kenya.
While the financial details of the deal remain undisclosed, Pearl Dairy Farms plans to leverage this acquisition to establish a manufacturing base in Kenya.
This strategic move aims to overcome previous hurdles faced by the company, including supply disruptions and trade disputes between Nairobi and Kampala.
The Mbarara-based Lato brand, introduced in 2012, has gained popularity in western Kenya, and having a local processing plant is anticipated to mitigate logistical challenges.
Earlier this year, in April, Pearl Dairy Farms secured a $35 million (Sh5.36 billion) loan from the International Finance Corporation.
Of this amount, $21 million (Sh3.22 billion) is earmarked for upgrading its powder milk plant in Uganda and acquiring a packing plant in Kenya.
The Kisii-based company specializes in the collection, processing, packaging, and sale of UHT long-life milk and yoghurt, making it a strategic fit for Pearl's expansion plans.
"The acquisition of the target (Kisii-based firm) will allow for a two-country manufacturing setup that will reduce turnaround time to customers and increase value-addition in both Kenya and Uganda," stated Pearl Dairy Farms in its submission to the competition commission.
The move is expected to unlock growth in the local markets, fostering independence from imports.
Pearl Dairy Farms, owned by the Midland Group, has been steadily expanding its footprint beyond Uganda, with Egypt, Kenya, Tanzania, and the DRC Congo as its first international markets.
The company, headquartered in Mbarara, relies on its western Uganda factory to supply a diverse range of products, including milk powder, liquid milk, yoghurt, flavoured milk, butter, butter oil, and ghee.
This acquisition initiative follows Kenya's decision in March to welcome Pearl Dairy Farms to invest in local dairy factories.
A collaborative agreement was signed with the State-owned financier Kenya Development Corporation, marking a significant step in Pearl's commitment to investing and growing within the Kenyan dairy industry.