ABU DHABI, (Pakistan Point News - 06th Oct, 2020) General Holding Corporation, Senaat, part of ADQ and the sole shareholder of Al Foah Company, on Tuesday announced that it has submitted a non-binding offer to the board of Agthia Group, a food and beverage company. The offer sets out the principal terms and conditions on which the majority of Al Foah’s business would be transferred to Agthia.
The proposed transaction would combine two leaders in their complementary food and beverage product categories to create one of the top 10 consumer F&B players in the MENA region, an ADQ press release said on Tuesday.
The combined entity will also become a domestic champion in four essential categories: water, dates, flour, and animal feed. As a more robust, diversified consumer-centric food and beverage player, Agthia will have an even stronger platform to compete across the MENA region and support Abu Dhabi’s efforts to secure supply chain, production, and distribution of essential foods.
By leveraging Agthia’s marketing and packaging expertise and its extensive network, the combined entity will expand its breadth of consumer products, especially in the more premium end of the date market value chain. It will also increase the combined entity’s competitive access to new market segments, such as supermarkets, hotels, restaurants and cafés, as well as export markets in Europe, the US and Asia. In addition, stronger supply chain relationships, distribution, sales and marketing channels would allow for long-term cost savings.
The proposed transaction offers shareholders a value-accretive deal with opportunities for several revenue-enhancing and cost-saving synergies, thereby creating a more robust consumer F&B platform with strong international prospects. The deal will also further strengthen Agthia’s balance sheet, giving it additional financial power and flexibility for potential acquisitions in the future.
The non-binding offer sets out the principal terms and conditions by which Senaat would transfer Al Foah to Agthia. As per the proposal, Senaat would transfer the entire issued share capital of Al Foah to Agthia. In consideration for the share transfer, Agthia would issue to Senaat a convertible instrument, convertible into 120 million ordinary shares in Agthia upon closing of the transaction.
The price at which the convertible instrument will convert into shares in Agthia is AED3.75 per share. This implies an equity value of AED450 million for Al Foah. Post conversion into shares, Senaat would own 59.17% of the entire issued share capital of Agthia, up from the 51% it currently owns in the Group.
In alignment with the strategic objectives of the deal to expand further as a diversified FMCG leader in the region, Al Foah’s organic date farm in Al Ain would not be included as part of the deal. The combined entity would focus on strengthening core activities of processing, sales, and marketing, and would plan to continue sourcing produce from Al Foah’s existing network of farmers.
Mohamed Hassan Alsuwaidi, CEO of ADQ, commented, "We see this proposed transaction as the integration of two leading operators in their respective categories that will create a national F&B champion. The combined company will have the scale, strength and ambition to create one of the top 10 F&B players in the middle East. We also see an opportunity to leverage Agthia’s expertise in FMCG brands across Al Foah’s world-class date offering to help accelerate sales in established and new markets and categories. This will in turn benefit Al Foah’s valued community of Emirati date farmers by increasing demand for their locally-farmed produce and protecting an essential part of our proud heritage."
If the Board of Agthia recommends the offer, and it is subsequently approved by the shareholders of Agthia, then Senaat anticipates closing this transaction before or during Q1 2021, subject to the receipt of all required regulatory approvals.
