Saudi’s Savola to distribute 34.52% stake in Almarai to shareholders

Savola, Saudi Arabia’s largest food products company, said on Wednesday it plans to distribute its entire 34.52 per cent stake in regional dairy firm Almarai to its eligible shareholders.

The deal will be preceded by a SAR6bn ($1.6bn) rights issue that will help strengthen the company’s position, including paying off debt and enabling distribution of shares of Almarai, the biggest dairy firm in the Middle East.

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.

Savola, Almarai stocks fluctuate

Savola’s shares jumped 3.8 per cent, Almarai’s shares were down 3.7 per cent at market open in Riyadh after the announcement was made.

Savola’s board has approved the rights issue and the distribution of Almarai shares, both of which are subject to regulatory and shareholder approval.

The objective “is to unlock value for Savola’s shareholders, who will benefit from direct exposure to the growth potential and future dividend capacity of Almarai,” Savola said in a stock exchange filing.

In October, Savola hired Moelis & Co to advise on strategic options for its business, including a potential sale of a portion of its stake in Almarai.

Saudi Arabia’s sovereign wealth fund, Public Investment Fund, owns a 16 per cent stake in Almarai through one of its subsidiaries.