Abu Dhabi-based food and beverage company Agthia acquired a majority stake in Jordan's Nabil Foods, marking its first foray into the processed food industry.
The deal is expected to provide "cost and revenue synergy opportunities" while providing Agthia access to immediate new revenue streams, the company said in a statement on Tuesday.
Agthia will acquire a 60 per cent stake in Nabil Foods from industrial holding company ADQ in exchange for a convertible instrument and a further 20 per cent stake from Ideal Holding, bringing the total size of its shareholding to 80 per cent in the food processing firm.
The price at which the instrument will convert into shares in Agthia is Dh5.50 per share, implying an equity value of Dh394 million ($1m) for ADQ's stake in Nabil Foods.
"The acquisition of Nabil Foods, once completed, would represent another step towards meeting our ambitions," said Alan Smith, chief executive of Agthia Group.
"It would be an accretive acquisition for both the business and our shareholders, an expansion into a growing sector with high-quality product offerings and a mutual commitment to innovation aligned with evolving consumer trends."
The acquisition, once complete, will further strengthen and capitalise Agthia’s balance, allowing it to continue pursuing its growth strategy, Mr Smith added.
The transaction is subject to obtaining regulatory and shareholders’ approvals, Agthia said.
Nabil Foods has a processing capacity of 43,000 tonnes per year and has over 600 individual product lines. The company earned revenues of Dh365m and net income of Dh32m in the 12 months to the end of September 2020.
It also has a well developed research arm that studies consumer preferences such as plant-based proteins – capabilities that Agthia can tap into for developing new products with higher margins, the Abu Dhabi food and beverage giant said.
Agthia, which owns water brands such as Al Ain and Al Bayan, recently completed its merger with date processing firm Al Foah. It has been diversifying its portfolio with investments in complementary food sectors.
The company said last year it is looking to acquire Kuwait’s Al Faysal Bakery and Sweets and signed a purchase agreement with the firm.