Business | Economy
Savola to purchase Saudi Geant stores
The Saudi-based Savola Group said it agreed to pay 440 million riyals (Dh430.49 million) to buy all Geant supermarkets owned by Fawaz Alhokair Group, absorbing its second retail competitor since 2008.
- Reuters
- Published: 20:37 July 25, 2009
Riyadh: The Saudi-based Savola Group said it agreed to pay 440 million riyals (Dh430.49 million) to buy all Geant supermarkets owned by Fawaz Alhokair Group, absorbing its second retail competitor since 2008.
Savola has signed an agreement with Alhokair to buy Geant supermarket outlets in the kingdom, it said in a statement posted on the bourse website yesterday.
"We are taking all the Geant stores in the kingdom, they are 11," Savola's Chief Executive Sami Baroum told Reuters.
The deal will enable Savola's retail arm Azizia Panda to raise to eight from seven per cent its share of the Saudi retail market and would increase its turnover by 13 per cent, the company said.
The agreement gives Alhokair, a diversified retailer group and commercial malls developer, the option to buy a 10 per cent stake in Azizia Panda three years after the signing of the agreement.
"Alhokair is a major retail player with long experience in the development of malls and fashion retail. We want to benefit from this experience," Baroum said. "Whether he agrees to buy the 10 per cent or not, Geant stores will remain with us."
Shares in Savola rose by up to 2.3 per cent after the announcement, while shares in fashion retailer Fawaz Abdul Aziz Alhokair surged up to 7.8 per cent.
Fawaz Alhokair Group is a key shareholder in Fawaz Abdul Aziz Alhokair and Co. Savola hopes that Azizia Panda would take within five years a 10 per cent share of the Saudi retail market which it estimated to be generating a turnover of 96 billion riyals per year.
"Organic growth will be the way forward for Azizia to get to 10 per cent market share. I don't see at this point prospects for new acquisitions," Baroum said.
Azizia, which is 80 per cent owned by Savola, plans to have 120 stores by the end of 2010, double its level in 2008.
The deal with Alhokair is Azizia Panda's second acquisition in two years. In February 2008, Azizia announced the purchase of Giant Stores from private Saudi conglomerate Al Muhaidib Group under a share swap deal.
Fawaz Alhokair Group teamed up in 2004 with France's Casino to bring the Geant supermarket brand to Saudi Arabia.
Azizia Panda competes with France's Carrefour and the local Abdullah Al Othaim Markets.
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