Saudi dairy producer, Danone to hold merger talks

SAUDI ARABIA – The National Agricultural Development Company (NADEC) and Al Safi Danone Company (ASD) have made plans in a non-binding agreement to explore a possible merger.

The shareholders of the privately held Al Safi Danone are expected to own 38.75% of NADEC at the end of the proposed transaction, according to a statement to the Saudi stock exchange.

“The term of the MOU [Memorandum of Understanding] is for a period of six months.

The parties have agreed on an exclusivity period during which they will conduct financial, commercial and legal due diligence,” NADEC said in a disclosure to the Saudi stock exchange.

The merger plan follows banking and insurance companies in Saudi Arabia starting potential combination talks, as at least four insurance companies had earlier in the year studied plans for the same.

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NADEC, under the memorandum of understanding, was proposing to buy all shares of the ASD in exchange for new NADEC shares to ASD’s current shareholders.

“Subject to confirmation during the due diligence phase, at completion of the Proposed Transaction, the current ASD shareholders will, in aggregate, own 38.75% of NADECs pro forma issued share capital,” NADEC told the Saudi bourse.

“The Proposed Transaction will be subject to a number of conditions including, without limitation, entry into definitive agreements, NADECs EGM approval and ASDs shareholder approvals and obtaining the necessary approvals from the relevant government authorities,” NADEC said.

“The entry into these discussions does not guarantee that the Proposed Transaction will be completed.”

Danone recently bought a stake in Yooji, a French maker of frozen organic baby food, in its quest to grow footprint in the dairy industry.

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NADEC, which has a market capitalization of about US$700 million.

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