Saudi Arabia’s National Agricultural Development Company (Nadec) has announced that it is abandoning plans to acquire local dairy peer Al Safi Danone (ASD).
In March it seemed the deal was done and dusted and that Nadec, which is 20% owned by the country’s sovereign wealth fund, would take control of Al Safi Danone, a joint venture between French dairy giant Danone and Al Faisaliah Group Holding (AFG).
But in an announcement to Tadawul, the Saudi stock exchange, on Sunday (23 June), Nadec said it was pulling out of the deal “in light of changes to market dynamics since the execution of the agreement”.
The deal would have created one of the largest dairy producers in the country but Nadec said in its statement to the stock exchange: “The board of Nadec and the ASD shareholders have concluded that the transaction as previously contemplated is no longer in their best interests and, accordingly, have agreed to mutual termination in accordance with the terms and conditions of the agreement.”
It added: “This announcement marks the end of an extensive exercise and the board of Nadec is confident that its current strategic position in the market will enable it to continue to drive growth opportunities in favour of its shareholders, employees and customers.”
ASD was formed by Danone and AFG in 2000, with the French company holding a 50.1% stake. In 2016, Danone became a minority partner after AFG’s dairy operations were transferred to ASD in exchange for newly-issued shares in the venture.
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A deal to sell the business to Nadec was first mooted in October last year.
In March, Nadec said the deal would help it develop a broader portfolio and enhance its regional reach outside the kingdom in the United Arab Emirates, Kuwait, Bahrain, Jordan and Lebanon, in addition to new countries such as Iraq and Oman.
It was revealed in return for acquiring the ASD venture, Nadec would issue new shares in itself to Danone and AFG. The two companies would own 38.8% of Nadec.
When contacted by just-food, Danone confirmed the news and added: “As a shareholder of ASD we will continue to support the company and its management team on the execution of its growth plans.”