The company will recognise profit from the deal in this quarter's results
Saudi Arabia's Savola to sell down Almarai stake
Savola Group, one of the top food products companies in Saudi Arabia, is selling a 2 per cent stake in Almarai, the biggest dairy firm in the Arabian Gulf, a deal that could help boost Savola'ssagging income.
The sale of 16 million Savola shares in Almarai at 70 riyal a share will yield 1.12 billion riyal (US$307.6 million), the company said in a statement to Saudi Stock Exchange (Tadawul) where its shares are traded. The transaction will reduce Savola’s shareholding in the dairy company from to 34.52 per cent from its current level of 36.52 per cent.
Savola, whose business interests also span across agriculture and retail sectors, said the deal is being done through an accelerated book-building process. The completion of the transaction remains subject to the successful execution of the special trades settlement.
HSBC Saudi Arabia is working on the deal as broker and bookrunner, while Abuhimed AlSheikh AlHagbani in co-operation with Clifford Chance are the legal advisors on the transaction.
If the deal is completed successfully, Savola will record a profit of 694m riyal during the third quarter of 2017. Savola intends to use the proceeds of the sale for general corporate purposes, it said in the bourse filing.
The deal could help Savola in boosting its weakening profitability amid slow economic growth. The company in August reported a 9.6 per cent drop in second quarter net income. Lower sales and reduced margins in the retail sector and a rise in losses in unnamed associate companies dented the company's net profit, it said in statement at the time.
Consumer spending in Saudi Arabia, Opec’s top oil producer, has declined amid lower oil prices and slower economic growth, which has affected retailers in the region’s biggest economy.