Savola Group has announced its intention to distribute its entire 34.52% shareholding in Almarai, the Middle East’s leading food and beverage company, to eligible Savola shareholders following a SAR6 billion ($1.6 billion) rights issue. 

 

Savola’s Board of Directors has approved this move to commence preparation in relation to the transaction, which is subject to regulatory authorities’ approvals and thereafter EGM approval, a statement said.

 

The objective of the distribution of the Almarai shares owned by Savola Group is to unlock value for Savola’s shareholders, who will benefit from direct exposure to the growth potential and future dividend capacity of Almarai. Almarai has been one of the most successful investments for Savola Group to date, it said.

 

The rights issue will allow Savola to strengthen its financial position and continue to invest in the growth of its portfolio, while paying down debt and enabling the distribution of the Almarai shares to eligible Savola shareholders, the statement said. 

 

Sulaiman A K. Al-Muhaidib, Chairman of Savola Group, commented: “This unique transaction comes at an exciting moment in our four-decade history, as we seek to unlock and optimise value for our shareholders. The distribution of our stake in Almarai will provide our shareholders with direct exposure to one of the region’s most loved and trusted food brands. Going forward, we will focus on investing in the growth of our core food and retail businesses, whilst continuing to review strategic options to realize value from portfolio companies that demonstrate attractive distribution and monetization potential.”

 

Waleed Khalid Fatani, CEO of Savola Group, said: “This is another important step in Savola’s value creation journey, during which we have established a longstanding track record for executing investments and transactions that deliver highly attractive returns. This transaction is a first of its kind for both Savola and the Saudi capital market, and the Rights Issue and distribution of our stake in Almarai will give our shareholders direct exposure to both our own compelling and growing portfolio and the long-term potential of Almarai. With a view to the future, we will continue to pursue the growth of our operating businesses while evaluating opportunities to realize value for our shareholders.”

 

The statement said Savola’s Saudi retail segment leader, Panda, has demonstrated healthy recovery in profitability, thanks to a successful Customer Experience (CXR) programme. Panda’s future growth strategy centers on sustaining this positive momentum by expanding its footprint and bolstering it with digital initiatives. Savola will consider a listing of Panda in the future, presenting an additional shareholder value creation opportunity. 

 

Savola’s long-term strategic focus will be to continue to grow and optimise its portfolio of operating businesses in basic foods and fast-growing value-add food categories, underpinned by its longstanding track record and its vast reach within the Kingdom and wider MENA region.

 

It should be noted that the planned Rights Issue will be followed by a capital reduction (subject to regulatory and EGM approvals), which is required to enable the distribution of Savola’s shares in Almarai. 

 

Savola indicated in its announcement that it will make further announcements as the implementation of the transaction progresses, in accordance with the Capital Market Authority's regulations and the Saudi Exchange's (Tadawul) rules.

 

Savola Group, founded in 1979, is a leading strategic investment holding group in the food and retail sectors across the MENA region. It operates Savola Foods which produces and exports everyday household products including oil, sugar, and pasta to cover more than 50 countries around the world. It also operates the grocery store chain Panda with more than 190 stores in 42+ cities across the Kingdom of Saudi Arabia and Egypt. It owns a 34.52% stake in Almarai as well as a 51% stake in Alkabeer Group for frozen foods. Savola also owns the largest stake, 49%, in Herfy Food Services Company, which manages 400 outlets. -TradeArabia News Service