Saudi Arabia’s Almarai, the biggest dairy company in the Middle East, is buying Bakemart’s business in the UAE and Bahrain for Dh93.5 million ($25.47m) as it expands its product range across the region.
The agreement to acquire 100 per cent of the company was reached on Monday, Almarai said on Tuesday in a statement to the Tadawul stock exchange, where its shares trade.
Almarai will use its operating cash flow to fund the acquisition, with the financial impact expected to be reflected in the company’s next quarterly results.
The deal remains subject to regulatory approvals, including a nod from Saudi Arabia’s General Authority for Competition.
“This acquisition will further expand Almarai’s bakery product offering,” said Almarai.
It will also “enhance Almarai’s ability to increase its contribution to the kingdom’s food security, in alignment with the kingdom’s Vision 2030 programme”.
Bakemart produces bakery items and frozen foods for the retail and hospitality industry in the Middle East. It also runs a number of its own food retail and cake shops.
Founded and managed by T K Khaleel, the company employs about 800 people and has a strong presence in the UAE, Bahrain and Qatar.
Food and beverage companies are increasingly evaluating acquisitions to drive growth, diversify their product range and expand their regional footprint, putting them in a better position to deal with challenges linked to Covid-19.
Abu Dhabi’s Agthia Group, one of the Mena region’s top food and beverage companies, recently completed its merger with date-processing company Al Foah.
Aghthia also bought Kuwait’s Al Faysal Bakery and Sweets, which quadrupled its size in the country, as part of its strategy to acquire complimentary businesses.
Almarai increased its stake in Pure Breed Poultry in August 2019, after acquiring processed meat company Premier Foods earlier that year.
In January, the company reported a 7.7 per cent jump in its 2020 fourth-quarter net income to 335.9m Saudi riyals ($89.63m).
Revenue for the reporting period climbed 3.1 per cent from a year earlier to 3.82 billion riyals.
However, its investment activity last year fell by 73.2 per cent to 787.6m riyals as the pandemic disrupted businesses.
The drop resulted in investment activity accounting for 5.1 per cent of total revenue, compared with 20.5 per cent in 2019.
