March 27, 2018

Saudi Arabia's Nadec to acquire Danone unit

Danone SA's venture in Saudi Arabia will be bought over by the country's National Agricultural Development Co. (Nadec) - a decision which would lead to the creation of one of the biggest dairy producers in the kingdom, Bloomberg Businessweek reported.

Nadec will fund the acquisition of Al Safi Danone through a capital increase of about US$143 million. Upon the deal's conclusion, Nadec's shareholders will hold 61.25% of the company while Al Safi shareholders will own 38.75%.

The acquisition is expected to help both companies "better serve customers and realise benefits not available on a standalone basis," said Abdulaziz Al Babtain, managing director of Nadec.

"It will create a platform for future growth and, importantly, drive significant value creation for shareholders," he added.

The slow growth of Saudi Arabia's economy has prompted companies to consolidate in order to save costs, a development supported by new takeover regulations which ensure easier closure of such deals.

As a result, mergers and acquisitions in the country have been gaining pace in recent times.  

- Bloomberg Businessweek