Mead Johnson and Almarai Announce Agreement to Form Pediatric Nutrition Joint Venture in GCC

Almarai and Mead Johnson will each hold a 50 percent interest in the joint venture, and both bring significant strengths to the enterprise. Almarai offers its extraordinary knowledge of the local market, excellent dairy supply, and an extensive distribution network.

31 Mar 2010 --- Mead Johnson Nutrition Company, the global market leader in the infant formula category, and Almarai Company, the leading food and beverage company in the Gulf region, announced that they have agreed to form a pediatric nutrition joint venture.

Almarai is a trusted brand across the Gulf Cooperation Council (GCC), with market leadership in dairy, juices and baked goods. The largest integrated dairy foods company in the world, Almarai has particularly strong marketplace presence and distribution coverage in KSA and the other member countries of the GCC - Bahrain, Kuwait, Oman, Qatar and the United Arab Emirates.

Mead Johnson is a global leader in infant and child nutrition, integrating advanced nutritional science with marketing expertise. The company has an extensive portfolio of highest quality products with high levels of consumer awareness and loyalty. It has also earned a strong reputation of trust and expertise in the health care community.

"We are very excited about working together with Almarai to build a strong presence in the pediatric nutrition market in the GCC," stated Steve Golsby, president and CEO of Mead Johnson. "This venture offers us a great entry point into the GCC, 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. We see this as a tremendous opportunity to enhance nutritional offerings and increase consumer choice in the region."

Almarai and Mead Johnson will each hold a 50 percent interest in the joint venture, and both bring significant strengths to the enterprise. Almarai offers its extraordinary knowledge of the local market, excellent dairy supply, and an extensive distribution network. Mead Johnson provides deep understanding of the pediatric nutrition industry, well-known and trusted products, a talented professional sales force, and cutting-edge capabilities in manufacturing, R&D and innovation. Additionally, both companies have tremendously well-known brands that are synonymous with quality, leading to the decision that the products to be sold by the joint venture will be co-marketed under the Mead Johnson "Enfa" and Almarai brands.

"From their leading position in key infant nutrition markets across the globe to their excellence in supply chain to their position as the leading innovator in the category, we consider Mead Johnson to be the perfect partner for Almarai," stated Abdulrahman Al Fadley, CEO of Almarai. "Even more importantly, they share our commitment to quality, innovation, brand building, and understanding the needs and tastes of consumers. With the first manufacturing facility for infant formula products in the region, we believe that we are in the ideal position to create lasting and positive relationships with business partners, health care professionals and consumers throughout the Gulf region, and we look forward to building and growing this business with Mead Johnson in the coming years."

In a recent investment research report, Credit Suisse identified "27 Great Brands of Tomorrow" that they believe will "significantly outperform the market over the next three to five years, as they build and leverage brand equity to grow in size, scale, and profitability." Mead Johnson's Enfamil and Almarai are two of the brands featured on the list.

"You do not often get the opportunity to put together two such dynamic market leaders and two such powerhouse brands," commented Golsby. "We see this as an unbeatable combination that will create a win-win-win situation, benefitting not only both companies, but also the people and communities of the GCC."

Almarai is constructing a new manufacturing facility for pediatric nutrition products just outside Riyadh that is scheduled to be commissioned during 2011 and will be leased by the joint venture. A management team, sourced from both parent companies, will oversee the facility and run the business on a day-to-day basis, reporting to the venture's board that will also be composed of representatives from both companies.

It is anticipated that the joint venture will turn profitable during 2012. Mead Johnson indicated that the impact on earnings per share during 2010 and 2011 is expected to be de minimus.