December 4, 2024

 

Saudi poultry giant Alwatania explores sale amid Saudi Arabia's push for food self-sufficiency

Saudi Arabia-based Alwatania, the Middle East's largest poultry producer, is considering a potential sale of the company as Saudi Arabia's focus on food self-sufficiency enhances the attractiveness of the industry, according to sources familiar with the matter.

 

The company has engaged BSF Capital as its adviser for the potential transaction, which could be valued at up to SAR 2 billion (US$532 million), one of the sources said. The discussions are still ongoing, and there remains the possibility of delays or the deal falling through, the sources added.

 

Neither Alwatania nor BSF Capital has responded to requests for comment.

 

Saudi Arabia's food industry is undergoing significant transformation as part of Crown Prince Mohammed Bin Salman's economic reform initiatives. The emphasis on food security has intensified following disruptions caused by the COVID-19 pandemic and the war in Ukraine, which impacted global supply chains and drove up food prices.

 

The Saudi poultry sector has witnessed notable activity, including a joint venture between Brazilian chicken exporter BRF SA and Saudi Arabia's Public Investment Fund, which acquired a stake in a regional poultry firm. Additionally, companies like poultry and dairy producer Almarai Co. are expanding their operations within the kingdom.

 

In September, Saudi Arabia's Ministry of Environment, Water and Agriculture reported record poultry meat production of 558 million kilograms in the first half of the year, representing a 9% increase from the previous year.

 

Founded in 1977 by Sulaiman Al Rajhi, Alwatania has grown into a major player in the industry, processing over 1 million birds and 1.5 million eggs daily. Sulaiman Al Rajhi also co-founded Al Rajhi Bank with his brother. The bank is the largest lender by market capitalisation in Saudi Arabia and one of the world's leading Islamic banks.

 

The Al Rajhi family, among the wealthiest non-royals in the kingdom, has been instrumental in the company's growth. However, the potential sale of Alwatania reflects broader changes in the region's food industry as global challenges drive nations to secure their food supply chains.

 

For context, the world's largest poultry producer, JBS SA, processes 4.4 billion chickens annually, significantly surpassing Alwatania's output. The prospective sale of Alwatania could mark a key shift in the Middle Eastern poultry market as it aligns with Saudi Arabia's broader vision for economic diversification and food security.

 

-      Bloomberg