Good morning, thank you for joining us today. I hope you're well in this time of rising numbers of COVID cases. My name is Samuel Sigrist. I'm the CFO of SIG and also the chairman of our JV in the Middle East. I'm joined today by Abdelghany Eladib, our COO of our JV in the Middle East. Today, we are very excited to announce the acquisition of the remaining 50% of our Middle East JV, SIG Combibloc Obeikan, which will give us full operational control over the business and allow us to consolidate the highly attractive growth business with a very attractive financial profile. As a result, we will be able to further expand in the fast-growing region of Middle East and Africa and to further build out our position with the global blue-chip FMCG players present in the region, as well as, of course, leading regional producers.
At the same time, our partnership with the Al Obeikan family will continue, as the Obeikan Investment Group will hold approximately a 5% stake in SIG. Given his industry and regional expertise, Abdallah Al Obeikan will be nominated as Member of the Board of Directors of SIG. Today, we would like to provide you with more details on the transaction, as well as more insights into the exciting market and our business in the Middle East and Africa region. We look forward to taking your questions after the presentation at an audio Q&A session hosted by Rolf Stangl, our CEO, Abdelghany Eladib, and myself. As many of you know, SIG is a leading system and solutions provider for aseptic carton packaging solutions. We are one of only two truly global players in this highly attractive segment.
Our razor-and-blades business model has enabled us to achieve consistent growth over the years. Today, we have an aseptic carton share of 21% globally. Around two-thirds of our sales are in liquid dairy, which also includes alternatives to cow milk, such as vegetable or grain, nuts, and seed-based milks, also yogurt drinks, amongst others. Our end market's proven to be very resilient throughout many crises, also this year, when the world has been hit by the COVID-19 global pandemic. We operate at the entry-level, when consumers in the developing regions move to processed and packaged food. In the non-discretionary segment, our customers use our solutions to pack food products that are consumed daily. Our installed base of around 1,250 fillers in field, including the ones in the JV, are placed at the heart of our customers' operations.
We have a global footprint with a significant presence in all regions. Over the past decade, we have grown the business from a European-centric business into a truly global business, generating about 44% of our revenues in EMEA, about 38% in APAC, and about 19% in the Americas. Geographic expansion has remained a priority since our IPO back in 2018. As a result, we opened our tech center in China in 2019 to cater for the fast innovation cycles which we see in the APAC region, and in order to ensure not only customer but also consumer proximity. We also announced the construction of a new sleeve plant in China as a response to the growth we have seen in the APAC region. The plant is expected to come online as planned in Q1 2021.
At the end of November 2019, we acquired Visy Cartons, our only licensee, which gives us a direct presence in Australia and New Zealand and exposure to the growing dairy export market from those countries into Asia. The acquisition of the remaining 50% of the Middle East and Africa joint venture is an obvious continuation of the strategy which we have been pursuing for some time. I know this region well, having visited it many times, also given my role as the chairman of the JV, and I have always been impressed by its great dynamism and the huge opportunity which this region represents. Some of that dynamism comes from young and growing populations in countries where GDP per capita is on the rise.
This is accelerated by urbanization, disposable income growth, and a change in lifestyle and related consumption habits towards processed and packaged food, where our aseptic carton packaging solutions play an important role. As you know, aseptic does not require cool chains, and our cartons perfectly meet the logistical requirements of the developing world. We see a particular opportunity in liquid dairy, where per capita consumption still lags well behind developed economies. Liquid dairy products will remain in high demand in this region, also as a result of increasing protein demand. The JV has significantly expanded its presence over the last 19 years. It is today present in 17 of a total of 70 countries, covering a little more than 45% of the region's population. In many of these markets, our aseptic carton share is below the regional average. This shows just how much potential there is for us going forward.
Before we talk a bit more about the potential, let me run you through the key aspects of the transaction. SIG will acquire the remaining 50% of its Middle East JV for a total consideration to be paid at completion of EUR 167 million in cash, plus a fixed number of newly issued SIG shares, corresponding to approximately 5% fully diluted ownership of SIG. The cash component of the consideration will be financed by available cash balances, and our leverage will remain broadly unchanged. We expect to complete this transaction in Q1 2021, subject to customary closing conditions. As mentioned earlier, Abdallah Al Obeikan will be nominated for election to the board of directors of SIG at the next annual general meeting, which will bring additional regional packaging sector and food and beverage expertise to our board. Why does this transaction make perfect sense for SIG?
It enhances our geographic presence in a region with strong growth prospects. According to the market study we published at the time of the IPO, Middle East and Africa, after Asia-Pacific, is the fastest growing region, with expected growth rates of 5.5%- 6%. In specific countries and categories, that growth can be significantly higher. In addition, we are acquiring a well-invested footprint in terms of both fillers in field as well as sleeves production plant. Abdelghany will talk more about our state-of-the-art plant in Riyadh, which we complemented in 2017 with an extrusion line and which today covers all manufacturing steps of the sleeves production. We acquire a footprint which would take many years of significant CapEx to build up organically.
We will be able to serve global accounts in a better way. We will also have the opportunity to move closer to the customers and consumers in the region in order to create value through our consumer-centric innovation, and by delivering to the market sustainable and affordable food packaging solutions in line with our responsibility agenda. The acquisition allows us to get full operational control over the business. As a result, we will consolidate a sizable business with a very attractive growth and financial profile. The consolidation of the business in the Middle East and Africa region will also provide greater transparency to you in our financial statements about the performance in the region. It will move the focus away from lagging indicators such as cash collected dividend to the metrics of revenue and earnings growth, as well as cash conversion, similar to our other regions.
A fully consolidated Middle Eastern business gives us the opportunity to deploy cash flows at an attractive return on capital employed. The transaction will be accretive to free cash flow per share as well as to earnings per share from year one post-acquisition. The leverage of the combined business will be broadly unchanged versus SIG today. As we have seen, over the last 10 years, we have deliberately expanded our presence in growth regions outside Europe, and today, Asia-Pacific and the Americas represent over 55% of our sales. With today's transaction, we will further diversify our global presence, and on a pro forma basis, about 2/3 of our sales will be in growth regions outside Europe. Middle East and Africa will represent approximately 14% of our revenues and will be reported as a separate segment.
While we will fully consolidate the business with approximately EUR 300 million, the external sales of the combined business will go up by approximately EUR 200 million. As approximately EUR 100 million of today's sales made by SIG to the Middle East and Africa JV will become intercompany sales. Given the favorable macro trends in the Middle East and Africa region, the combination will create a higher growth business with access to new and attractive markets.
This acquisition will further strengthen our margin and our ability to generate cash. On the top left of this slide, you see the SIG adjusted EBITDA margin for the 12 months to September 2020. Top right, you see the pro forma margin based on full consolidation of the JV. We expect the ongoing high level of profitability of the Middle East and Africa business also to be accretive to margin in 2021, the first year of acquisition.
The transaction will also contribute to increasing the rate of cash conversion, which is already at a solid 73%. Overall, the combination creates a more transparent business with a strong margin and cash flow profile. It is entirely consistent with our strategy at SIG of growing the business while maintaining a rigorous focus on returns. This journey started nearly 20 years ago in 2001 with our first factory opening in 2005, which is actually the year I joined SIG and the year I met Abdallah Al Obeikan, the CEO of our JV partner, Obeikan Investment Group. OIG has strategic interests across a number of industries with a strong foothold in packaging and strong local business knowledge. The full investment in the extrusion plant in 2017 now allows us to produce our own laminated board, and we are able to supply our customers with a wide range of SIG cartons.
We have built a very diversified customer base, including blue-chip FMCG customers like PepsiCo, Coca-Cola, and Danone, and of course, regional players including Almarai and Chinle. Altogether, we have more than 70 customers with around 190 fillers in field. I think this is evidence that SIG technology and solutions are recognized and valued in the region. The JV has delivered rapid growth and has grown profit even faster. We generated revenue CAGR of 14% and an EBITDA CAGR of 24% over the last 15 years. This thanks to the deployment of SIG's razor-and-blades business model. On average, we have placed 13 new filling lines every year since 2004. Recently, we accelerated growth in South Africa and have increased our share of wallet with existing customers, while at the same time, winning new ones in the region.
With a special focus on liquid dairy, given the resilience of the category. We are also expanding our presence into food while maintaining a strong position in non-carbonated soft drinks. We are very confident that under the full ownership of SIG, the Middle East and Africa business will be able to take advantage of many new opportunities while continuing its strong track record of financial performance. Let me now hand you over to Abdelghany.
Thank you, Samuel. Let me start by saying how excited I am about the joint venture becoming a full member of the SIG family. Please allow me to introduce myself. My name is Abdelghany Eladib. I joined SIG Combibloc Obeikan four years ago, and I bring more than 26 years of expertise with top FMCG companies in the region. My experience at SIG has been exciting so far. What is fascinating to me is the technology behind every pack, ensuring it's healthy, tasty, safe, and available in supermarket shelves. What we do here is impactful in so many ways. The collaboration with SIG has always been very fruitful, and I'm convinced that the integration represents great opportunities and will allow us to accelerate the success that we've delivered so far. Let me first describe the main trends driving growth in the Middle East/Africa region.
The global market for aseptic carton packaging is expected to grow at a CAGR of 3.5%-4%, whereas in the Middle East/Africa region, we have a stronger forecast growth rate of 5.5%-6%. Samuel already mentioned the key drivers: population growth, rising disposable incomes, convenience, and urbanization. In addition to those, it's important to remember that purchasing power in many countries is still quite low compared with developed markets. This means that affordability is very important. The SIG system, with its ability to change over carton size and format very quickly, is ideally suited for customers catering to consumers that do not have yet the purchasing power of the Western world. Now, more than ever, especially given the current pandemic, food safety and health are top of mind for customers and consumers.
Aseptic carton is the perfect packaging for countries with hot climates and limited refrigeration possibilities. This is particularly key in liquid dairy. Liquid dairy has been our strategic focus to build on already strong presence in the important juice market in this region. You can see examples of our recent dairy expansions on the right of the slide. This remains a key strategic priority because milk is an important and cheap source of protein. It's a big opportunity in this region as people become able to afford better nutrition. Per capita consumption of milk is the same as in the Asia PAC region, which is less than 10% of the consumption in Europe. Think of the opportunity in a region with the fastest-growing population, which accounts for 22% of the total globally. Keep in mind that within the region, there are already significant differences.
In Nigeria, for example, they consume less than a glass of milk per capita per year, compared with the regional average of 3 liters. The opportunity is huge. Today, we're number two player with a 25% aseptic carton share. The 11% share represented by other players is very fragmented. This is a great result, as it's the same share as SIG has in Europe, where the company has been present for many decades. It shows just how rapidly we've grown, built on the expertise and local knowledge of the OIG group. Today, around 63% of our volumes are liquid dairy, compared with less than half five years ago. We have a well-balanced geographic split across the different subregions, at the same time, we are seeing lots of opportunities in the significant white spaces, given that there are 50-plus countries in the region where we are not yet present.
Our regional footprint consists of our manufacturing hub in Riyadh and our sales and service offices in 10 countries. I'm proud that the Riyadh Plant meets the highest global standards, which is a great addition to the SIG Supply Network. Let me give you a tour of our factory, where the high standards will shine through, including for safety and quality. The standards have been recognized regionally and globally, as you will also see in the video.
Product safety and quality, as well as environmental and safety management, are essential requirements for us to satisfy the needs of our customers. Over the years, the SIG Combibloc Obeikan plant in Riyadh, Saudi Arabia, has received several safety awards and accreditations from global awarding bodies. It has achieved world-class environmental, safety, and operational performance and continues to meet the latest global standards of excellence. In 2018, the plant was awarded the prestigious King Abdulaziz Quality Gold Tier Award, bestowed by the Saudi Arabian government. Based on international standards, this is considered to be the most important Saudi award for operational excellence. It honors the best-performing plant for achieving the highest standards of quality.
In 2019, and in recognition of the world-class quality of its operations, the plant in Riyadh became the first system supplier in the region to attain an AA+ rating for food safety from the British Retail Consortium Global Standard for Packaging and Packaging Materials. This rating represents the highest achievable certification for production excellence. In 2020, while continuing to upgrade its operations, the plant celebrated several more awards, including the SIG CEO's Safety Excellence Award, won for the third time after achieving more than two and a half million working hours without a lost time incident. Riyadh also became the first SIG plant to be certified to the new ISO 45001 work safety standard. The plant is among the first in its industry to complete the Sedex audit in Saudi Arabia, obtaining the highest certification score for maintaining social sustainability and operational standards.
These global certifications demonstrate that our production and packaging systems adhere to food safety legislation and maintain the highest standards of hygiene and quality. They underpin the confidence our customers have in our company and in the products we deliver to them.
Our outstanding plant in Riyadh serves a diversified customer base across the region. We very much appreciate how loyal our customers are. Our top 10 customers have been with us for more than 10 years. Roughly 60% of sales comes from market leaders, number one or number two, which underpins the resilience of our business. As you can see, we're well-established in both liquid dairy and non-carbonated soft drinks, and we are now gaining a firm footing in food as well. For example, our customers are constantly expanding into food categories and just recently launched bechamel sauce, tomato puree, and other dressings. This is thanks to the strength of our technology and the quality of our service that the customer expanded their business with us. We're well-positioned to capture growth in this region. Our innovation enables our customers to meet emerging consumer trends.
Pioneer Foods in South Africa was one of the first companies outside China to launch combismile in response to the trend towards on-the-go consumption. Pioneer also has the drinksplus option, which is SIG's unique technology of allowing the filling of particulates, such as cereals and pieces of fruit. In Nigeria, we introduced a small and affordable carton for evaporated milk. Previously, evaporated milk had only been sold in cans, and there had been no innovation in the segment. This new format is very successful, and the trend of replacing can with carton is now being rolled out to other West African countries, including Ghana, a new market for us. Almarai, the Saudi company, is the largest vertically integrated dairy company in the world. We have 100% share of wallet with this customer, supplying cartons in all three categories: liquid dairy, non-carbonated soft drinks, and food.
Our offer goes way beyond just cartons. Let me show you a video on how we have helped Almarai to significantly improve their production and improve machine performance at their factory, delivering better efficiency and utilization.
At Almarai, we are always striving for operational excellence. We began a discussion with SIG Combibloc Obeikan to implement a customized solution with the goal of increasing workforce efficiency.
We took on this challenge to improve Almarai's total system output. While leveraging the existing tools we have and implementing customized methods, we focused our efforts on eliminating losses. With implementing the manufacturing excellence solution, we were able to deliver results while leveraging the power of digitalization.
In the first quarter of 2020, we deployed a team of six people on top of the customer-dedicated 14 engineers to the Almarai plant in Saudi Arabia. Solution implementation began by highlighting the elements that were preventing production from operating at optimum performance.
One of our requests to SIG Combibloc Obeikan was that our machine had to continue operating, especially during Ramadan.
By fully utilizing our digital tools, we were able to make great improvements. In this case, the productivity has increased by 5%. The overall line utilization has increased by more than 30% compared to August 2019. The main contributors to this enhancement were the reduction in technical losses and machine downtime, and improvements in preparation time.
Asset performance management, or APM, via the use of the SIG Plant 360 system, gave us a day-to-day insight into the operations and allowed us to understand filling line health in real time. Our field service management reports have been a key element in understanding performance and spare part consumption, thereby allowing better allocation of our field service engineers and spare parts.
Automated daily reports by the reliability center robots enabled us to understand factors such as preparation time, uptime, and breakdown time, and ultimately improve the overall equipment effectiveness.
Remote support by SIG Combibloc Obeikan is a revolutionary new way to receive assistance remotely. Our team of experts simultaneously utilize live data and augmented reality tools to solve technical problems. This was a massive advantage during the corona lockdown when there was no access to the plant.
We would like to praise the team that has serviced Almarai. We appreciate the commitment. It has fully demonstrated a real partnership with a world-class supplier.
Our complete solutions, beyond cartons, are recognized by existing and prospective customers. In conclusion, this transaction makes perfect sense given the opportunity the region presents and our leading presence underpinned by a state-of-the-art plant. Given our long history and shared DNA, I'm confident that the integration can't be but seamless.
Thank you, Abdelghany. We are indeed very excited about this opportunity to expand our presence in Middle East and Africa. We gain full operational control over a business with strong growth prospects, driven by macro trends and white space opportunities. The innovative solutions which differentiate SIG from competitors are already proving their worth in the Middle East and Africa region. This is a high-quality asset. We know the business and the people well, and we expect a seamless integration. The transaction will accelerate growth and increase profitability for the combined group. We will maintain a high level of return on capital employed, sustained by the widened opportunity for our razor-and-blades business model. Thank you very much for listening today, and we look forward to taking your questions.
The first question comes from Lars Kilberg from Credit Suisse. Please go ahead.
Thank you. Just first question really comes back to the growth prospects are, of course, looking pretty good. At the same time, looking at your annual reports since 2015, this has been a moderately declining top line by around 2% per annum. If you can comment a bit what has been happening and why this would change at this moment? Considering the growth prospects, if this happens to be a particular opportune time to acquire the business. You haven't shared with us any sort of debt you may assume in the transaction. If there's any such, please let us know what that is. The final point, I guess you're talking about higher cash conversions, et cetera, and potentially lower CapEx needs in this business versus SIG legacy. Why is that different? What sort of CapEx to revenues do you expect in this business?
I guess the final point, what is the difference between the EUR 290 you're talking about now and broadly speaking, the EUR 380 you generated in these two JVs in terms of revenues as presented in 2019 annual?
Thanks a lot for your questions, Lars. Maybe to tackle them in the order how you ask them. I hope I got the full first part. There was a bit of a noise at our end. I think your question was around the growth profile that we see. Obviously, there is Middle East as a market, and you remember the study that we published at the IPO, which is the second fastest-growing market for our products for the aseptic beverage and food carton after Asia-Pacific. While Asia-Pacific is expected to grow with 6%-7%, the region Middle East and Africa is expected to grow with 5.5%-6%. We are particularly delighted that with this transaction, we get full control over this second fastest-growing market. There are a number of metrics from my perspective that describe this opportunity from a growth perspective very nicely.
Number one, if you look to our presence today in the region with 17 out of 70 countries where we have by now a foothold, and we have a share in the region of approximately 25%, which is on a similar level like we have in Europe, where we obviously have a very long-lasting presence. I think that speaks, it's a testimony to the team, what the team did. Also you can imagine that in these 17 countries, we do have also markets with lower share. That means. Per se, the 25 suggests that there is ample room for us to grow, but also the markets where we have a presence, but are subscale is another opportunity. Then we do obviously have the opportunity to enter new geographies, new white spot geographies within this territory.
First and foremost, and we talked about that earlier, it's Pakistan, but it's also sub-Sahara Africa, which offers a number of opportunities, whether that's Ghana, whether that's Kenya. They're very attractive markets for us to enter. I think the team in the region, as well as our global team, they have a track record of establishing a presence in the new market and developing new markets. The second question, I believe, was around timing, and maybe at the end you can clarify whether I covered all your questions. The second question was around timing.
Yeah. If I may. My question was really about the contraction you've seen in revenue over the past five years or so in this business, which has been about 2% per annum on a CAGR basis. That's what I meant, the timing. Are we now at an inflection point where that growth will start to come through?
Yeah, I think that was one of your points also that you had later on, the 290 versus the 380. What you see in our financial reporting historically, what we disclosed, were the revenues of both entities. There is a lot of intragroup revenue between the Saudi factory and the Dubai sales entity. If you add up those numbers, you get to numbers that obviously show obviously also the intercompany sales between the two entities. Really what the business is about, it's a business with give or takeEUR 290 million external sales. That hasn't contracted, that has grown. You might remember there was one year in the history of over, or close to 20 years of the existence of the JV. That was 2018, where we did see headwinds and where the top line did go slightly into decline.
The team was able to get back on a growth trajectory, right, with 2019 numbers and continues to right that even in the current COVID environment. Abdelghany can later comment on that. We talked about the fact that we did grow at 6% constant currency in the first nine months of the year. I think that's a testimony to what we just discussed before, that there is ample room for us to grow in the region. As such, we don't find the timing odd. I think that I hopefully clarified the top line development question. There's really indeed growth for basically 20 years apart from that one outlier year. The timing obviously is a function also of two parties coming together.
I believe Abdallah Al Obeikan and his family, they deemed it now for them the appropriate time to elevate basically the partnership to a new, so to speak, global level. I will tackle now your other questions, then we may clarify other points. You asked for the debt profile. The debt profile of the JV, we talked about at the end of 2019, is in that form that we have a leverage of broadly one time EBITDA, or that is net debt of give or take EUR 90 million that we have in these combined entities of the JV. The cash conversion is a bit better than our group, as you have also seen probably in the deck that we shared before, which is a function also of CapEx requirements for the Riyadh plant and upfront cash generation of the business.
We believe that is going to be a positive addition to the group also from a cash conversion perspective. The CapEx needs, just to follow on that, we see at this point no reason why we would need to change our midterm guidance, which talks about this 8%-10% net CapEx of top line growth that we need to sustain our top line growth. That also would include any additional investments into Riyadh plant and the filler base in the region. You have seen the video before. I think it comes across, at least in my mind, very clearly that this is a well invested footprint that we acquire. 190 million, 190 fillers in field, most of them from the latest generation. Plus the state-of-the-art Riyadh factory, including an extrusion line, which went on stream in 2016, 2017. That obviously is the well invested footprint.
Maybe that leads me to your last question, 290 versus 380. I think we clarified these revenue numbers by now. The external sales is indeed EUR 290 million. However, if you look to what it's going to do to our group profile, we're going to add, give or take, this EUR 300 million external sales. On the other hand, you may remember that our EMEA segment did show what we supplied into the JV so far. That is about EUR 100 million. We add EUR 300 million external sales of the Middle East and Africa business. We also internalize EUR 100 million of supply into the JV, which now will become intercompany. That explains why our pro forma statement is going to show a net increase of give or take EUR 200 million revenue.
If you look to the EBITDA perspective, you saw here the LTM EBITDA of EUR 80 million. If you deduct the give or take EUR 20 million cash collected dividend. We're going to add another EUR 60 million EBITDA to the group. That's what it does from a financial profile perspective. I'm happy to clarify any point that wasn't clear.
That's perfectly clear. Thank you. This is, again, to your point earlier, this is clarifying your accounts, and it's a good thing, generally speaking, for an investor side, I would assume so. Thanks again. A very clear message.
Thank you, Lars.
The next question comes from Joern Iffert from UBS. Please go ahead.
Hello, gentlemen, and thanks for taking my questions. The first one would be, please, on the return as capital, free cash return as capital. If my initial calculations are not totally wrong, the investment of the EUR 480 million you are spending roughly is around 5%. Free cash return as capital yield, this is significantly below, of course, your group average. What can you do in terms of cost savings, any synergies when you are the 1% owner to really significantly improve here the free cash return as capital in this region in the next couple of years? The second question, please, can you remind us of the book value the joint venture has, and also if historic spendings, CapEx, et cetera, was really shared 50/50? Really the last question, sorry, I did not fully get this in your previous answers.
What was really the operational turmoil you had here one or two years ago, and how did you fix it? Thanks very much.
Thanks for your questions, Joern. Maybe just start with the first one, the return on capital, or respectively, I think you put it now as a return on investment of the acquisition, but I think the way we look at it is the return on capital employed, similar to what we have as a key metric in our group. You're familiar with the fact that in SIG Group, we look at the post-tax return on capital employed of give or take 24%. At this stage, I think we should say JV has similar return metrics, because obviously it's the same business model that we also pursue in the Middle East. That's why we are very excited that obviously we add with one transaction a business of, we talked before about the external sales of net EUR 200 million external sales.
It's similar financial characteristics, very attractive characteristics as the rest of the group. Imagine if you would need to build that organically, how long it would take and how much CapEx it would need to build this state-of-the-art factory in 190 Philipson Field. I think if you triangulate, I think it makes sense, the transaction also from an overall total consideration perspective. It provides us fully consolidated now the opportunity to deploy our strong cash flows in a region with similar return characteristics. Again, it's our razor-and-blades business model. That's how we look at it. From a synergy perspective, obviously we're going to integrate the Riyadh factory into our broader network, and there is an aspiration as we have that with all our plants to continue to drive operational excellence. In the end, it's not a synergy-driven acquisition.
It's an acquisition for growth and for an expansion of our consolidated financial statements by taking full control now of an entity that it's so far not consolidate. I think on the book value of our share today, keep in mind, we do have a historically driven number, which is the equity accounting method there, which is not in relation to the current consideration. What the CapEx question is concerned whether it really was paid 50/50. The CapEx was financed out of cash flows of the JV entities. We talked before about the net debt level, which is rather moderate. Absolutely, I think the CapEx was financed out of the cash returns that the business in the Middle East provided. With regards to the question on the operational turmoil of 2018, I'm happy to elaborate on what happened back then.
I would also say it's more a market-driven than an operational turmoil, and I think also turmoil is probably a big word. At the point in time when we disclosed our 2018 numbers, we looked at the business for the full year 2018 in Middle East, and I'm talking about the external sales of the JV that were slightly in decline. That obviously was a surprise shortly after the IPO. It was also a surprise to management, and we had also there a rather very weak Q4. What has happened back then, we were, maybe I label it that, overexposed in juice. Juice in the Middle East, we look at it as a bit of a less resilient category. That's why since then we have done a lot in dairy and did also win a lot of share in dairy.
What has happened in 2018 to some degree was the perfect storm. There were some economies that were down because of a low oil price. There were local currencies that were soft versus the hard currencies, and that does, on the juice side, drive up input cost for the juice products because a lot of the citrus fruits imported out of Brazil and obviously other larger producers are US dollar denominated, and with local currency being weak, those input costs went through the roof, and that did affect consumption. Then the other one was, and we discussed it extensively, central banks started to impose some restrictions in terms of customers that we had. They signaled to us they want to place orders and buy, but central banks said they didn't open up the flow for LCs.
As you're familiar with the fact we only do business in dollar and euro in that region, and that is through up and until today, and it's going to be true going forward. We weren't able to trade. That, I think, was a perfect storm. Fairly quickly, the team could prove that that was a dip and brought the business back on a growth trajectory. Since then, and I think they came across also in Abdelghany's part before, has significantly gained market share in dairy, which we believe is a fantastic category to play within this growth market.
Very helpful. Many thanks.
Thanks, Joern.
The next question comes from James Rose from Barclays. Please go ahead.
Firstly, on growth, I think in the presentation you say that packaged food from 2020 to 2025 is expected to grow at 10%, but the demand expectation for the region overall is 5.5%-6%. Just interested in your thoughts there as to why it's lower than the broader category overall. Secondly, could you give us some color on the type of packs you most commonly sell in the region and what you think the market will trend towards in the future? Thirdly, growth-wise, what do you think you can do now that you couldn't do before with it being part of the broader consolidated group? Thank you.
Thanks, James. I also want to give Abdelghany the chance to tackle these questions. Maybe, Abdelghany, if you want to go first.
Okay. Can you hear me?
We can hear you, Abdelghany.
Very good. I'll take the questions on the format. We're very well-balanced between the small portion, mainly the 200 milliliters, and the mid-size format. You can say it's roughly 60% small format to 40% mid-size format. Category, Sam will very much emphasize on the last question on the accelerated strategy to push liquid dairy, which really proves how resilient it is. I mean, Sam will talk about that we've accelerated that. Last year, we closed at 64% liquid dairy, and it was roughly less than half five years ago. This year, with COVID, this actually proved that how resilient is dairy. Now we're even pushing that further, and it's on the edge of even 70%. That's mainly on the packs and on the categories. Samuel?
Thanks, Abdelghany. I think also your first question, James, on the pace of how aseptic is expected to grow, I think obviously, there are different ways to slice and dice the market. We believe that within the more broader category of liquid food and also then when it comes to aseptic, the carton is the fastest growing substrate. Also, you may remember what we discussed in the context of India, there are other forms of processed and packaged foods that also operate at this entry level. Really at the point where people with increased disposable income can start to buy this processed and packaged food, there are some other solutions also for non-liquid food, that obviously is normally in the maturity curve of a market. The market goes through first before then aseptic comes, I think that's the spirit one should look at the 10%.
I think it just underlines really the need of the region for processed and packaged food solutions, and that is going to be obviously also what is the driver of our category. I think what is going to be different, and that's your third question, going forward, what can we do differently from a go-to market perspective or strategy perspective as now as we own the business fully? I think the business was also in the past well integrated with SIG and our approach. That said, if you think about global accounts, which definitely have a presence also in the region, there is maybe now the possibility and opportunity to work a bit even closer to integrate with the global account management better.
Another way is that our global functions, including new product development as well as R&D, will automatically move a bit closer to the region, Middle East and Africa. As we have a consumer-centric R&D approach, that will also allow to take the needs of the consumers in this region more on board so that we can tailor more and more solutions also for these attractive markets. I would say that's maybe two aspects to consider.
That's great. Thanks very much.
Thanks, James.
The next question comes from Christian Arnold from Stifel Schweiz AG. Please go ahead.
Yes. Good morning, gentlemen. I have a question on your aseptic carton market share in the EMEA region, which you show on page 18, I think. I wonder if you could share how the situation looked like maybe 10 years ago, where your share was and where especially the other share was from the other players. What do you expect going forward, this 11%? Is that going down to a level we see in European region, like 5%? What's your assumption here?
Thanks for your question, Christian. I can't remember by heart where the share was 10 years ago. As a matter of fact, what we have experienced in Middle East, Africa is the similar pattern that we see in all these markets where we're present. 10 years ago, that was halfway, basically the existence of the business, our presence in the region. We were on all accounts growing. We started our journey out of the Arabian Peninsula more into North Africa. Back then, the presence in Sub-Sahara Africa was basically not existing, and also we were rather on the rise in North Africa as we started the business really in Saudi itself and the opportunities that we saw there. There's definitely, if you think about the industry structure back then, a much bigger share that sits with Tetra.
I think you refer to this 11%, which is probably worth to elaborate. It's really a number of very small players, and there you see a very fragmented landscape. Obviously, going forward, we have all the aspiration that we demonstrated in the other geographies to continue to outgrow the market with, again, not by a differentiation through price, but through our differentiated technology. I think there are many aspects how we can prove that. We just talked before about how we did gain share in dairy. Another aspect which is still not yet on the level that we have it obviously in Europe or also North America is food, but we do see attractive project opportunities where with our technology, we can make a difference in liquid food. Obviously, the ability to pack particulates is a distinctive advantage, and that's where we see more opportunities also going forward.
Would it be fair to assume that you are taking market share more from the others than from your large competitor?
I would say, the others, and we had discussed that also in the context of China, if you may remember. Others often play in a kind of application field that we label as high-acid. This can be ready-to-drink tea segment. This can be very watered-down juices. Areas where the aseptic safety is less critical. I think it's probably fair to say we're going to take share going forward from both. As you see that in other markets, obviously Tetra Pak is the main competitor if you look into those categories where we play and that we deem attractive.
More technical question. You expect transaction to close in Q1. Would it be more at the beginning of the year or more towards end of March?
Probably. We need to go through some customary processes, including some antitrust filings. I have a hard time to predict that now, whether that's going to be the earlier or the later part of Q1, but the aspiration is to close in the first quarter.
Thank you.
Thank you, Christian.
The next question comes from Daniel Koenig from Mirabaud Securities. Please go ahead.
Yes. Hi. Thanks for taking my questions. I have some very simple questions. I was wondering why your other joint venture partner is actually selling. It makes so much sense for you. Higher margins, you're enhancing your growth profile. I'm just wondering why your partner is selling. Then I had another question. Do you have a reason why the competition, the others, is that the share is so much smaller than in Europe? Do you have a simple answer to that question? Thanks. That's it.
Thanks, Daniel. I mean, the why now question obviously ultimately can only be answered by our partner. We did work together very closely, and we have a shared set of values that was the anchor point of this cooperation. I think it was a truly 50/50 joint venture, not only by the legal terms, but also by the spirit, how we did run the JV. As these talks now came up with regards to this transaction with our partner, I think the CEO of our joint venture partner of OIG, Abdallah Al Obeikan himself, was very clear that he sees the natural home for the business in Middle East, Africa with SIG. I think probably a number of factors have driven the why now. The business by now has reached a scale, and you saw that in the deck.
It's going to be 14.14% of the combined business going forward, which is a similar size almost like our Americas segment. The business has reached a scale where obviously the management of the region is a bit different and he felt that the full integration in SIG is the right point in time. He also was the CEO for 19 consecutive years of successful growth and obviously at one point, everyone has the right to also advance. I think that probably a number of factors came together. On the other hand, we are absolutely delighted about this opportunity as we do see the perspectives as discussed before, the growth profile, the financial, as you say, attractive financial profile, but also the well-invested footprint.
With regards to competition, I would say that the structure is not so different than what you see in Europe, so pretty comparable. As I said before, the 11% is just probably even more fragmented than it is in Europe, if that answers your question, Daniel.
Okay. Thanks.
Thank you.
The next question comes from Alessandro Foletti from Octavian. Please go ahead.
Yes. Thank you for taking my questions. Also, I have a couple here. I was wondering, again, coming back to Al Obeikan selling, and as I understand there's a lockup also for some period on his shares. I received this morning in my calls a couple of pushbacks, I have to say, on this transaction because they say, well, you say the growth rate was 14% over the 19 years, but it obviously was less than that in the last 10 years, probably. Maybe the story is coming to an end for them.
I understand. Thanks a lot for your question, Alessandro. You're absolutely right. There is a lockup. There's a lockup for 50% of the shares for two years and a lockup for the other 50% of the shares for one year. I think that itself is well above market standard in such a transaction. From our perspective, really underlines the commitment that the joint venture partner has and the desire to become a partner now as a strong shareholder on a global level. Every time a structure changes like this, in this instance, people start to look for the reasons, right? I just described to the earlier question, that's really how we think about this opportunity. You see that the 14% growth CAGR goes back 15 years out of the history of the 20-year of the business.
Of course, in the early years, the growth is much faster than maybe a business that gains market share over time. That said, we are fully convinced that we're going to continue to see very attractive growth rates out of that region and that SIG will be able to develop the business along the lines as we are in the rest of the world. With regard to the timing, I think I answered that aspect before. It is underlined for the commitment that OIG had a desire to get a compensation or part of the consideration in shares. There is, on both sides, continued conviction about the opportunities in the region.
Right. Thank you. Maybe as a final question on this subject. Obeikan obviously has a joint venture also with Elopak. Do you see any potential conflicts of interest now because of that or not at all?
No. I'm not the one to comment on what the current status is of the JV and in what form that is existing today. You're absolutely right. Prior to us establishing a JV with them, they already had a JV with Elopak back then. Over all these years, I think in terms of size between these two businesses, SIG was by far the more significant business to the family. I would even dare to say the stake in SIG going forward is by far the more important stake than the fresh business that they operate in the region. There were no conflicts of interest in the past. We don't think also the agreements that we entered into are going to make sure that there are no conflicts of interest going forward.
Our partner is absolutely committed to see the SIG business in Middle East and Africa thrive also going forward.
Great. Thank you. I have two more, if I may. One is on the fillers. The way I understand it so far, the joint venture has been buying the fillers, i.e., the way I think of it, you shouldn't have a lot of fillers that have been placed via leasing. Is that something that may change? If yes, will it have a change? May you be able to grow faster if you start leasing? Do you need more CapEx?
You're absolutely right, Alessandro. We did sell, as SIG, the fillers to the JV, and the JV did deploy it similar to how we deploy fillers. They co-invested and had the filler regardless of the sale and lease model because of substantial form with the same accounting on its balance sheet. Now, going forward, and that was what we had so far as external sales, this give or take EUR 100 million that I say we're going to internalize. We're going to see the similar, from an accounting or financial perspective, the similar value flow as we see with our other regions. We're going to continue to build fillers in China and Germany, and they're going to be deployed in the region. The only difference is now that we fully consolidate the balance sheet of the Middle East and Africa business.
I think from a market opportunity perspective, you're right that they are depending on the region. There is either a preference for sale or lease, but we find combinations in all the territories where we operate. I don't think that is going to change in any way the dynamic, as we're going to continue to adhere to our strict hurdle rates that we also apply in the broader group.
Great. Thank you. My last question. I was wondering, you mentioned Pakistan, if I understood you correctly, then Ghana, Kenya. Can you maybe be a little bit more precise on which white spots you may be willing to target?
Well, first of all, Pakistan is definitely a very important market for the joint venture. However, over the last 19 years, let's not forget the fact that we've leveraged many more attractive opportunities in other countries. You've seen our success coming from zero to 25% in 19 years, which is really remarkable. This does not mean that Pakistan is not in our radar. It is in our radar, and we're working in the coming, let's say, horizon to gain foot in there. In Ghana, similarly, it's an attractive market. You've heard about our story in Nigeria, in which we talked about dairy resilience, and we talked about conversion into evaporated milk. This has found similar traction, and we are on the edge of getting close in Ghana to the end.
Does this answer your question, Alessandro?
Partially. I would have preferred to have a list of six, seven countries.
Yeah. I think maybe the second target country didn't come across very clearly acoustically. I think Pakistan, definitely a market. I think Ghana, definitely a market. I think Abdallah already referred to an opportunity in Nigeria. Also equally, Kenya is a big market there, and there are also opportunities that we see, not because only from the market perspective, but also because of the partners we have there in Botswana, just to name a few. You see there is an opportunity angle on Sub-Saharan Africa, besides obviously Pakistan, which is a huge market.
I would also say I'm also proud of our presence in South Africa, which we came in five years from almost 0% to more than 30%. Now South Africa, at the display, there are specifically lots of export opportunities to help us also penetrate lots of opportunities in the lower parts of Africa. White space market is definitely a good target for the SIG Combibloc.
Great. Thank you very much.
Thank you, Alessandro.
The next question comes from Sandeep Deshpande from Morgan Stanley. Please go ahead.
Thank you for taking my questions. I have just two left. One is a clarification. If the transaction goes through, should we expect midterm guidance to be adjusted for Visy and joint venture acquisitions? You still are thinking of 4%-6% midterm growth? Secondly, can you provide us a sense of if there are any provisions, and what is the working capital like in the joint venture? Thank you.
Sure. Thanks for your question, Sandeep. From a today's perspective, we don't see any reason to change our midterm guidance, but you're familiar with our update cycle of guidance. We also provide with the year-end 2020 more clarity around especially 2021. When it comes to net working capital, you can think of the business in the Middle East and Africa region following the similar profile that you see also in SIG. I think the difference is that there is no factoring program in place as we have it in many parts of the rest of SIG. At the same time, you're also familiar with the fact that over the course of the year, we do accrue these volume bonuses, which obviously help to compensate net working capital. Also that's a similar profile that you can expect there.
I think also there with regards to our midterm guidance, we don't see a reason to change this 5% to 7% that we have talked earlier about. I hope with that I did answer your questions.
Yes, it does. Just on the provisions, are there any provisions taken at the joint venture?
There is no provision that is worth to be flagged at this stage here. Maybe also if you refer to the closing mechanism, from a today's perspective, there are no material net debt adjustments identified, if that makes sense.
Okay. Thank you.
Thank you.
Gentlemen, so far there are no more questions.
If there are no more questions, we appreciate your time today. We hope we were able to bring across our excitement and obviously create also similar excitement at your end with this transaction. With this, we hope to catch up soon, latest for the year-end financials, and hope you stay safe throughout the still ongoing COVID-19 situation. Thank you very much for your time today.