State-owned ADQ’s General Holding Corporation (Senaat) has submitted an offer that will consolidate two of the UAE’s major companies, creating one of the top ten players in the food and beverage market in the Middle East and North Africa (MENA) region.

The proposal would transfer the majority of the business owned by Al Foah, the world’s largest date processing and packaging firm, to Agthia, one of the region’s leading food and beverage companies behind brands like Al Ain Water, Yoplait Yogurt and Grand Mills Flour.

“The combined entity will also become a domestic champion in four essential categories: water, dates, flour and animal feed,” ADQ said on Tuesday.

Senaat, the sole shareholder of Al Foah Company, has already submitted a “non-binding offer” to the Agthia board, to set out the principal terms and conditions for combining the two firms.

“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 ten F&B players in the Middle East,” said Mohamed Hassan Alsuwaidi, CEO of ADQ.

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 3.75 UAE dirhams per share. This implies an equity value of 450 million dirhams for Al Foah. Post conversion into shares, Senaat would own 59.7 percent of the entire issued share capital of Agthia, up from the 51 percent it currently owns in the Group,” ADQ explained.

Benefits of the new entity

 With the new entity, ADQ said 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 said.

“It will also increase the combined entity’s competitive access to new market segments, such as supermarkets, hotels, restaurants and cafes, as well as export markets in Europe, the US and Asia… Stronger supply chain relationships, distribution, sales and marketing channels would allow for long-term cost savings,” it added.

(Writing by Cleofe Maceda; editing by Seban Scaria)

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