Abu Dhabi-based food group Agthia is studying potential acquisition targets in order to help it meet a target set by its chairman of reaching $1 billion in revenue by the end of 2020, its CEO has said.
The target, which was reiterated in the company’s 2017 annual report by chairman Dhafer Ayed Al Ahbabi, is some way off being met as things stand, with revenue for the first nine months of 2018 declining by 5.2 percent to almost 1.49 billion dirhams ($405.7 million).
“Definitely, I think to hit that particular milestone in the year 2020, it might slip a little bit based on the current economic situation,” Tariq Al Wahedi told Zawya in an interview at the company’s headquarters in Abu Dhabi last month. “It also depends on how soon we can find our M&A targets as well – whether we find the right targets.”
The company has the capacity to spend up to 2 billion UAE dirhams to find the right targets, Al Wahedi said, and was “aggressively” seeking opportunities.
“We are still keeping our (revenue) target as is, we are not changing our plan,” he said. “But we will not just jump on any target,” he said, adding that any potential acquisition needs to share the firm’s own ideas and culture. He said that it had already turned down plenty of potential deals.
“We see targets... on a monthly basis, two or three targets,” he said. “So we are very careful, we are very selective.
“Once you go and buy something, it sticks to you for a long time.”
Agtiha is actively seeking opportunities in a number of different countries, he said.
“Our preference is for Saudi for now, but we are quite open to find something in the (wider) region as well.”
Nishit Lakhotia, head of research at Bahrain-based investment bank Sico, told Zawya that for Agthia, “the water business is where all of the focus has been in terms of growth”.
He argued that this makes a lot of sense.
“Water is a high-margin business and it's a stable and sustainable business,” he said.
(Reporting by Michael Fahy; Editing by Shane McGinley)
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