Savola Group plans distribution of Almarai stake to shareholders following rights issue

SAUDI ARABIA – Saudi Arabia’s Savola Group is set to distribute its stake in food manufacturer Almarai to eligible shareholders following the launch of an SR6 billion (U$1.6 billion) rights issue.

Savola, which previously held a 34.52% share in Almarai, aims to unlock value for its shareholders by providing them with direct exposure to the growth potential and future dividends of Almarai.

The decision to distribute the Almarai stake is subject to regulatory approval. Savola sees this move as a way to enhance its earnings while also reducing debt through the rights issue.

Almarai has been described as one of Savola’s most successful investments to date.

This strategic shift aligns with Savola’s focus on its core food and retail businesses, intending to invest in their growth while exploring strategic options to realize value from portfolio companies demonstrating attractive distribution and monetization potential.

The Saudi Public Investment Fund, through a subsidiary, holds a 16% share in Almarai. Almarai’s diverse portfolio includes products such as yogurts, desserts, labneh, hummus, baked goods, infant formula, dates, seafood, and poultry.

The company reported SR19.6 billion in revenue for the year ending December 2023, reflecting a 4.8% increase compared to 2022, with an operating profit of SR2.7 billion.

Waleed Khalid Fatani, CEO of Savola Group, stated that the transaction is unique for both Savola and the Saudi capital market, offering shareholders direct exposure to Savola’s growing portfolio and the long-term potential of Almarai.

“This transaction is a first of its kind for both Savola and the Saudi capital market, and the Rights Issue and distribution of our stake in Almarai will give our shareholders direct exposure to both our own compelling and growing portfolio and the long-term potential of Almarai,” he said.

“Savola Group aims to continue investing in its core businesses while evaluating strategic options for portfolio companies.”

The distribution of the Almarai stake is positioned as a pivotal move for both Savola Group and its shareholders, reflecting the company’s commitment to optimizing its portfolio and capitalizing on growth opportunities.

In addition, the company’s chairman Sulaiman A. K. Al-Muhaidib added that the move would “provide our shareholders with direct exposure to one of the region’s most loved and trusted food brands.

“Going forward, we will focus on investing in the growth of our core food and retail businesses, whilst continuing to review strategic options to realise value from portfolio companies that demonstrate attractive distribution and monetisation potential.”

The majority of Savola’s food investments go through its subsidiary Savola Foods. In 2022, the investor scooped Cairo-based baking group Egyptian Belgian Company for Industrial Investments.

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