Dubai: A consolidation move is happening in Abu Dhabi’s food sector, with Senaat (or General Holding Corporation) to transfer majority shareholding in Al Foah Company – the world’s largest date processing company – to Agthia Group. A non-binding offer has been made to Aghtia on this transaction.
Al Foah had revenues of around Dh504 million and net income of Dh83 million in 2019. The proposed transaction would "combine two leaders in complementary F&B product categories to create a Top 10 consumer F&B player in the region. The combined entity will also become a domestic champion in four essential categories - water, dates, flour, and animal feed.
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Also, Agthia will have an "even stronger platform to compete" region-wide and support Abu Dhabi’s efforts to secure supply chain, production, and distribution of essential foods. If the board of Agthia recommends the offer, and subsequently approved by the shareholders of Agthia, then the transaction could be effected before or during the first quarter of next year.
Mohamed Hassan Alsuwaidi, CEO of ADQ, said in a statement: “We see this proposed transaction as the integration of two leading operators in their respective categories that will create a national F&B champion. We also see an opportunity to leverage Agthia’s expertise in FMCG brands across Al Foah’s world-class date offering to help accelerate sales in established and new markets and categories.
"This will in turn benefit Al Foah’s valued community of Emirati date farmers by increasing demand for their locally-farmed produce and protecting an essential part of our proud heritage.”
Structuring the deal
The non-binding offer sets out the terms and conditions by which Senaat would transfer Al Foah to Agthia. As per the proposal, Senaat would transfer the entire issued share capital of Al Foah to Agthia.
In turn, Agthia would issue to Senaat a convertible instrument, creating 120 million ordinary shares in Agthia upon closing the transaction. The price at which the convertible instrument will convert into shares in Agthia is Dh3.75 per share.
This implies an equity value of Dh450 million for Al Foah. Post the conversion into shares, Senaat would own 59.17 per cent of the entire issued share capital of Agthia, up from the 51 per cent it currently owns in the Group.
Excludes the farm
However, Al Foah’s organic date farm in Al Ain would not be included as part of any deal. The combined entity would focus on "strengthening core activities" of processing, sales, and marketing, and would plan to continue sourcing produce from Al Foah’s existing network of farmers.