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CMA approves Almarai's $253.2m bid for Hadco

RIYADH/JEDDAH: Saudi-based Almarai 's $253.2 million cash and stock bid for Hail Agricultural Development Co. ( Hadco ) has obtained regulatory approval, leaving the merger's fate up to the shareholders.

A conclusive end to the bid, which was initially unveiled in July would give the Saudi stock exchange, the Arab world's largest, its first takeover involving listed companies.

Mergers and takeovers among listed firms are a rare sight in Saudi Arabia, due mainly to the pre-eminence of both day-trading and retail investors.

The Capital Market Authority ( CMA ) said at least 50 percent of shareholders in Hadco , would need to approve Almarai 's proposal for the deal to go through.

The two firms have fixed a Nov. 30 deadline for conclusion of the agreement. Hadco shares closed the previous session at SR30.1, which matched exactly Almarai 's bid, and was 2.7 percent its level since the two companies' boards agreed to the takeover terms on July 1.

Almarai had to improve an initial bid it made in November by 35.3 percent. The deal is crucial for Almarai , which is the Middle East's biggest dairy firm, because it would give it an entry into the lucrative poultry business.

According to Dubai-based Shuaa Capital, Hadco is the Kingdom's fourth largest poultry producer.

In addition to being a key domestic player in the poultry business, Hadco produces olives, wheat, dates and grass fodder. Almarai has its own cattle farms. Almarai has been diversifying its revenues through acquisitions and has earmarked SR6 billion ($1.6 billion) for investments to expand outside the Gulf Arab region.

Hadco shares jumped 5.32 percent to SR31.79. However, Almarai shares dropped slightly to close at SR153.25.

The Tadawul All-Share Index (TASI) ended 1.28 percent higher at 5,786.05 points, led by heavyweight Saudi Basic Industries Corp. (SABIC) which closed 3.10 percent higher at SR74.75. An overall positive day, with all sectors closing with gains, which ranged from 0.21 percent in the Media & Publishing sector to 3.69 percent in the Energy & Utilities sector. In addition, overall market breadth on Saturday was strongly positive, with the number of advancers coming up to 118, while the number of decliners was only 10, thus registering an AD ratio of 11.8, the Jeddah-based Financial Transaction House (FTH) said. Furthermore, the ability of the market to maintain the liquidity at a level above SR3 billion is impressive and could indicate increased investor confidence, the FTH said in its market commentary.

Meanwhile, Waheeb Abdulla Linjawi, group president and managing director of Saudi Cable Company (SCC), has announced that during the past two weeks the company has won a number of purchase orders for medium voltage power cables worth about SR74 million from Saudi Electricity Company's (SEC's) western operations area. The company has taken up immediate manufacture of these cables in order to effect deliveries over stages to be completed by the end of the current year.

Waheeb said in a statement on Tadawul website on Saturday that the inflow of purchase orders to the company marks the confidence of domestic companies in SCC's products and bodes well for the future of the company and its shareholders.

© Arab News 2009