The deal will create one of the kingdom’s largest dairy producers, and a major rival to the biggest player, Almarai, which was recently voted Saudi Arabia’s positively perceived brand for the third year in a row,
The deal for Al Safi Danone (ASD) will be funded through a 536 million Saudi riyal ($143m) capital increase.
NADEC said the deal would reinforce its position as a leading dairy and beverage company in the region and increase category participation through a broader brand portfolio in the fresh dairy, long life dairy and juice segments with the addition of well-established and complementary brands such as Al Safi and Safio and.
It will also allow entry to the value-added segment through the addition of a range of premium licensed brands from Danone, including Activia, Danette and Actimel.
Iraq target
The firm also believes it will enhance its regional reach, as well as open-up access to new geographies such as the high-growth Iraqi market via local manufacturing capabilities.
NADEC managing director Eng. Abdulaziz Al Babtain said: “We are delighted to announce this Transaction and believe it will better position NADEC by creating a strong player in the KSA dairy market and reinforcing its status as a leading regional dairy and beverage company.
“ASD’s iconic product portfolio comprising Al Safi and Danone-branded products will be highly complementary to NADEC’s existing product offering. The transaction will allow both companies to better serve customers and realise benefits not available on a standalone basis. It will create a platform for future growth and, importantly, drive significant value creation for shareholders.
“The transaction will also contribute to the goals of Saudi Arabia’s Vision 2030 by strengthening the private sector. We look forward to embarking on a new chapter in the proud history of NADEC and ASD.”
Last year NADEC eported a net profit of SAR 39.94 million for fiscal year 2017, down 57.61 percent year-on-year, due to a 6.62% fall in total sales.
The company's total revenue reached SAR 2.03 billion compared to SAR 2.18 billion in 2016.
Almarai, meanwhile, reported a net profit of SAR 2.2 billion for fiscal year 2017, up 1.6% year-on-year.