INDIA – LT Foods, one of India’s largest agro-processing firms, has achieved full ownership of popular rice company Dawaat Foods after acquiring the shares it did not previously own from Saudi Arabia’s state agricultural fund Salic.
Prior to the agreement, Salic controlled a 29.5% stake in the India-based rice company which it now cedes for a 7.89 direct stake in LT Foods and a further 1.33% from the Indian firm’s owners.
According to a report by Just Foods, the total 9.22% stake in LT Foods which will now be owned by Salic amounts to SAR208m (US$55.4m).
LT foods plans to use the proceeds from the deal with Salic to pay for the stake it is buying from Salic which is valued at US$21.7 million.
Following the transaction, LT Foods’ owners will now hold 51% of the business while 39.78% of the shares will be in the hands of public shareholders.
LT Foods said the new share agreement will “accelerate” the Indian firm’s “organic and inorganic expansion plans across business segments [and] give a boost to its future growth plans, specifically in the Middle East and Saudi Arabia”.
Vijay Kumar Arora, LT Foods’ chairman, said: “Our partnership with Salic is strategic in nature and goes beyond financial investment.
We have developed a deep understanding of the needs of consumers in the Middle East related to food products and it will open doors for LT Foods to further strengthen its presence in this segment.”
As well as basmati rice supplier Daawat, LT Foods owns the Royal and Heritage rice brands, Ecolife rice and pulses, the Devaaya bread flour line and Kiri Kiri Japanese snacks.
The Guruguram, India based company boats of an elaborate supply chain spread across 65 countries across Asia, Europe, and Africa and generated INR54.5bn (US$670 million) in revenue in its most recent fiscal year.
For its part, Salic plans to use its new stake in the Indian venture to “secure larger quantities of specialty basmati rice” for Saudi Arabia.
Salic CEO Sulaiman AlRumaih added: “The extension of our partnership with LT Foods is in-line with Salic’s strategy to contribute to the food security objectives,” adding its “investment in Daawat Foods gave us an understanding of the management style of LT Foods, their market and business understanding.”