Kuwaiti food distributor Mezzan Holding has acquired a 70 per cent stake in Saudi-based Al Safi Food Company, in a move described as its “first real entry” into the kingdom’s food manufacturing and distribution sector, the company said on Wednesday.
Mezzan, whose food distribution line-up includes Red Bull, Lurpak and S Pellegrino, acquired the stake via a capital injection of 90.75 million Saudi riyals into Al Safi, a Riyadh-based food manufacturing company established by Al Faisaliah Group that commenced operations in May last year, the Kuwaiti company said.
The capital injection includes planned capital expenditures leading up to the end of next year, said Mezzan, without giving further details.
The deal comes two months after Adeptio AD Investments SPC, based in the UAE and led by the Emaar Properties chairman Mohamed Alabbar, acquired Kuwait’s Americana, the company that operates KFC and Pizza Hut restaurants in the Middle East and North Africa, for US$2.36 billion.
Under the terms of the deal, Al Safi will be renamed Mezzan Food Company, and will have exclusive rights to import, manufacture, sell and distribute all Mezzan Holding brands in Saudi Arabia, and will continue to manufacture, market and distribute Al Faisaliah Group’s bakery and snack products.
The Mezzan chief executive Gary Walsh said that Saudi Arabia is expected to account for 5 to 10 per cent of the company’s revenues by 2018.
“Though [Al Safi] was acquired while in a start-up mode, it has a high turnaround potential and will immediately provide a new platform for both margin growth and distribution scale, in addition to complementing our activities in other markets and contributing to the group’s bottom line starting from 2018 and beyond,” Mr Walsh said.
Mezzan plans to use the capital injection to build new factories in the kingdom to serve the local market, Kuwait and other neighbouring markets.
jeverington@thenational.ae
Follow The National's Business section on Twitter
