Businesses acquired by UAE-based Agthia accounted for more than one third of its revenue last year, with the food company planning to deploy a further Dh1.5 billion ($408 million) on new acquisitions, according to its chief executive.
Agthia, which is owned by Abu Dhabi’s holding company ADQ, reported more than Dh3bn in revenue last year on the back of new acquisitions. Companies added to its portfolio include the world’s largest date processing and packaging company Al Foah, Kuwait’s Al Faysal Bakery and Sweets, Jordan’s Nabil Foods, Egypt-based meat processor Ismailia Investments, also known as Atyab, and snacks maker BMB Group.
“On a full-year basis … just over Dh1bn [in revenue] came from the new acquisitions,” Alan Smith told The National. “The profitability side of things [has] really gone strong … those new businesses [are] commanding high margins and being accretive for the company.”
The company’s group assets more than doubled annually to Dh6.4bn at the end of 2021 due to the consolidation of the new assets into Agthia’s business. Profit for the full year surged more than six-fold to Dh216m.
The Abu Dhabi-listed company will continue to look for new acquisitions to boost its portfolio and expand its operations in 2022, Mr Smith said. The company has a “fire power” of Dh1.5bn to buy new companies in the Middle East and Africa and in Pakistan, but it “really depends on whether they meet the criteria that we set out in terms of being accretive, being at the right price, being in the right categories and in the right markets", he said.
"We continue to look at opportunities for 2022.”
The value of mergers and acquisitions in the Mena region surged 57 per cent to $109.1bn last year as the region's economies recovered from the coronavirus pandemic.
The total number of M&A deals also jumped 40 per cent annually to 1,141, the highest annual total recorded since 1980, according to a report by Refinitiv.
“We continue to develop the pipeline, we continue to look at ideas, but as with any M&A agenda, it also depends on the targets and the valuations. We need to make sure that we're bringing value to the company and to our shareholders,” Mr Smith said.
Agthia manufactures, distributes and markets a range of food and beverage products, including popular regional brands such as Al Ain Water and Al Foah dates. The company’s assets are located in the UAE, Saudi Arabia, Kuwait, Oman, Egypt, Turkey and Jordan.
The company is transforming its operations under a new five-year growth strategy in its push to become the region's top food and beverage company by 2025. The strategy is built on three strategic pillars: growth, efficiency and developing capability, Agthia said last year.
“If we reflect on where we are on that five-year strategy, at the end of the first year, I think we are very happy that we have really executed against the indications that the strategy ... set down,” Mr Smith said.
Progress has been "good" on segments including acquisitions, capability, efficiency and cost savings.
Agthia is also looking to save Dh200m through “synergy extraction as well as simplification of its existing and acquired businesses”, said Mr Smith. “We are already ahead of that agenda and achieved 36 per cent of our target in the first year.”
The company has not made any decision in terms of raising corporate finance, “but we are constantly looking at the most efficient ways of doing that”, he said, without divulging further details.