Saudi Arabia’s Almunajem Foods Co. has started talks to acquire a minority stake in the local business Al Jouf Agricultural Development Company.
In a stock exchange filing yesterday (19 January), Almunajem Foods said the potential investment in the agribusiness is aligned with its strategy of “achieving continuous growth and strengthening its position within the food sector”.
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Al Jouf cultivates fruit, vegetables and grains such as potatoes, onions and wheat but also produces olive oil, honey, pickles, and French fries, according to its website. It was founded in 1988.
Almunajem Foods, which is predominately engaged in poultry production and processing, said it is exploring a transaction in which it would subscribe to new Al Jouf shares each priced at SR52.5 ($14).
“This initiative forms part of Almunajem Foods Company’s efforts to enhance integration across the food value chain and to evaluate investment opportunities that are consistent with its long-term objectives, support food security, diversify growth sources, and create added value for its shareholders,” Almunajem added in the filing.
Any potential agreement between Almunajem Foods and Al Jouf remains subject to internal approvals at both companies, as well as regulatory clearance from the relevant authorities.
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By GlobalDataThe talks follow Almunajem Foods’ recent seven-year processing and distribution agreement with Balady Poultry in Saudi Arabia.
Almunajem Foods markets more than 800 products, runs one factory and 13 branches. Its total production capacity is about 58,000 metric tonnes and employs more than 2,100 people, according to its website.
Last month, Almunajem received the first tranche of a long-term loan from the Saudi Industrial Development Fund (SIDF), amounting to SR11.6m out of a total approved facility of SR97.3m.
The funding will partially finance capital expenditure for the expansion of its food production facility in Jeddah. The plant is designed to have an annual production capacity of 35,000 tonnes.
Installation of manufacturing line equipment is scheduled to begin this quarter, with commercial operations expected to start in the second quarter of this year.
Almunajem Foods issued its third-quarter and year-to-date results in November.
Revenue for the three months to 30 September rose 2.2% to SR816.1m.
However, operating profit fell 5.2% to SR36.4m and net profit dropped 21.7% to SR31.7m.
The increase in revenue was attributed to a rise in volumes across all categories despite a drop in average selling prices.
Nine-month revenue dipped 0.5% to SR2.51bn while operating profit decreased 46% to SR118.3m. Net profit was down 52% at SR102.7m.
Almunajem Foods supplies chicken, turkey, duck and quail. It owns the Dari brand.
