F&B merger: UAE's Agthia Group shareholders approve acquisition of Al Foah

Proposal gets approval from shareholders of Abu Dhabi-listed firm

Electronic boards showing stock information are pictured at the stock market, in Dubai, United Arab Emirates, November 5, 2020.

Electronic boards showing stock information are pictured at the stock market, in Dubai, United Arab Emirates, November 5, 2020.

REUTERS/Abdel Hadi Ramahi

The UAE will see the conclusion of a deal to merge two food and beverage (F&B) companies led by state-run holding company ADQ anytime next month.

In a bourse filing on Monday, Abu Dhabi-listed Agthia Group said that its shareholders have just approved the proposal to acquire Al Foah Company.

“The transaction is expected to be completed by the end of 2020, after which Agthia Group will be 59.7 percent owned by Senaat, part of ADQ,” a separate statement reads.

The move is the latest in a series of consolidation deals in an economy that is significantly impacted by the coronavirus pandemic.

Khalifa Sultan Al Suwaidi, chairman of Agthia Group and chief investment officer of ADQ, said the recent shareholders’ approval supports their company’s plans to expand their offering of premium quality products.

“We embrace opportunities that allow us to strengthen the food and beverage sector in the UAE and wider region, and also emphasize our commitment to an outstanding experience,” he said.

Last October, ADQ’s industrial conglomerate, Senaat, submitted a proposal to transfer the entire issued share capital of its wholly-owned subsidiary, Al Foah, to Agthia.

The combined group is expected to have the scale, ambition and strong capabilities across the value chain to support expansion plans in the Middle East. It will also strengthen Agthia’s position as a “national and regional leader” in water, dates, flour and animal feed.

Expansion strategy

The shareholders’ approval comes as Agthia has just announced plans to acquire Al Faysal Bakery and Sweets, one of Kuwait’s established brands with strong distribution and manufacturing capabilities.

“The strategic combinations with Al Foah and Al Faysal are two of our key achievements of the current financial year, reinforcing Agthia’s vital role in the region’s food and beverages sector,” Alan Smith, chief executive officer of Agthia Group, said.

Under the terms of the agreement submitted by Senaat last October 6, the transfer of Al Foah’s share capital to Agthia will be in exchange for the issuance of mandatory convertible instruments with a nominal value of 1 dirham each, in an aggregate principal amount of 450 million dirhams ($122.5 million). These shall be convertible, immediately following the completion of the transaction, into 120,000 ordinary shares of par value 1 dirham in the capital of Agthia.

(Reporting by Cleofe Maceda; editing by Seban Scaria)


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