Riyadh: Almarai Co.’s top investor is exploring options for its $5.4 billion holding in the Middle East’s largest dairy firm, according to people with knowledge of the matter, in what could be one of the region’s biggest merger and acquisition deals.
Stakeholders at the Saudi Arabian food-processing firm Savola Group are working with US investment bank Moelis & Co. to find potential suitors for part or all of its 35 per cent stake in Riyadh-based Almarai, the people said, asking not to be identified because the information is private.
Shares in Savola jumped almost 10 per cent, the most since March 2020. Almarai stock fell more than 2 per cent to the lowest level since June at 2.28pm in Riyadh on Monday.
Talks are at an early stage and Savola may decide not to sell, the people said. Representatives for Savola and Almarai didn’t immediately respond to requests for comment. A representative for Moelis declined to comment.
Value of Savola's stake in Almarai
Savola’s stake in Almarai is worth about $5.4 billion based on Monday’s trading. At roughly $5 billion, Savola’s own market capitalisation is slightly lower than that.
16 %Holding in Almarai by the Public Investment Fund of Saudi Arabia, via a subsidiary
In 2017, Savola sold a 2 per cent stake in Almarai as part of “its capital reallocation” 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 noncore 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.