Savola, Saudi Arabia’s largest food products company, has announced its plans to distribute its entire 34.52% stake in regional dairy firm Almarai to its eligible shareholders.
The deal will be preceded by a SAR6 billion ($1.6 billion) rights issue that will help strengthen the company’s position, including paying off debt and enabling distribution of shares of Almarai.
“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,” said Mr. Sulaiman A. K. Al-Muhaidib, Chairman of Savola Group.
Going forward, Savola plans to focus on investing in the growth of its core food and retail businesses, whilst “continuing to review strategic options to realise value from portfolio companies that demonstrate attractive distribution and monetization potential.”
Savola also said its supermarket chain, Panda, has shown signs of healthy recovery in profitability and that it will consider listing the unit in the future.
“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,” said Mr. Waleed Khalid Fatani, CEO of Savola Group.
Savola’s board has approved the rights issue and the distribution of Almarai shares.
Savola’s shares jumped 3.8% following the news, while Almarai’s shares were down 3.7% at market open in Riyadh.
