Food conglomerate Savola will use capital raised to buy stakes in its subsidiaries
Savola Group has received regulatory approval to increase its share capital by SR339m ($90.6m) to SR5.34bn, which it will use to acquire stakes in two of its subsidiaries.
The Saudi Arabia-based food conglomerate plans to acquire a 10 per cent stake in Savola Foods Company (SFC) and an 18.6 per cent stake in Azizia Panda United Company from al-Muhaidib Holding Company.
Once the transaction has been completed, Savola will fully own SFC and its ownership of Panda will increase to 93 per cent. Al-Muhaidib Holding Companys stake in Savola will rise to 14.34 per cent. However, it will first need the approval from the Commerce & Industry Ministry before it can present the plans for shareholder approval.
Savola, which owns more than 100 supermarkets and hypermarkets in Saudi Arabia and dominates the market for edible oils and sugar, has managed to profit from high food demand to increase its market share of the kingdoms retail sector in recent years.
A shortfall between domestic production and imported supply highlights poses a major challenge for the country, which currently imports 80 per cent of its food. The UAEs Alpen Capital forecasts Saudi Arabias food consumption will grow at a rate of 4.2 per cent between 2011-15, with the cost of food imports estimated at $10bn a year.