Almarai Co.’s top investor confirmed that it’s exploring options for its $5.3 billion holding in the Middle East’s largest dairy firm, in what could be one of the region’s biggest merger and acquisition deals.
(Bloomberg) — Almarai Co.’s top investor confirmed that it’s exploring options for its $5.3 billion holding in the Middle East’s largest dairy firm, in what could be one of the region’s biggest merger and acquisition deals.
Saudi Arabian food-processor Savola Group said it’s working with Moelis & Co. to review strategic options for its 35% stake in Riyadh-based Almarai, confirming a Bloomberg report.
“While no decisions have been made at this stage in relation to the potential sale of a portion of its stake” in Almarai, “this is one of such options under consideration,” the company said in a stock market filing on Tuesday.
Shares in Savola closed almost 10% higher on Monday, while Almarai fell 1.2%. Savola gained as much as 6.8% on Tuesday, while Almarai was steady.
Talks are at an early stage and Savola may decide not to sell, according to people with knowledge of the matter. A representative for Almarai didn’t immediately respond to requests for comment. A representative for Moelis declined to comment.
Savola’s stake in Almarai is worth about $5.3 billion based on Tuesday’s trading. Saudi Arabia’s Public Investment Fund holds a 16% holding in Almarai via a subsidiary.
In 2017, Savola sold a 2% stake in Almarai as part of “its capital re-allocation” and last year it offloaded a stake in Knowledge Economic City and in its Moroccan unit.
In the group’s 2022 annual report, Chief Executive Officer Waleed Khalid Fatani said by exiting non-core sectors, Savola was “able to build, expand and refocus our fundamental operations, while creating growth opportunities both domestically and internationally.”
Savola mainly invests in food and retail, and also has investments in venture capital and private equity. In 2021, it signed a deal to buy the United Arab Emirates’ Bayara Holding for $260 million. A year later, it purchased bakery assets in Egypt, a key market for the firm.
Almarai was set up in the 1970s as a dairy company. Since then, it has branched out into other areas such as bakery products and poultry.
–With assistance from Matthew Martin and Farah Elbahrawy.
(Updates with share prices in fourth paragraph)
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