Takween signs agreement to sell 70% of subsidiary to China’s JOFO Nonwoven, expects capital gain of SAR 58 mln

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Takween Advanced Industries Co. signed a share purchase agreement with China-based JOFO Nonwoven Co. Ltd. to sell 70% of its subsidiary, Advanced Fabrics (SAAF), the company said in a bourse statement.

Under the agreement, Takween agreed to sell 92,260 shares in SAAF, representing 70% of its share capital, for a price based on a total value of $90 million (SAR 337.5 million) for 100% of SAAF shares, subject to certain adjustments based on net debt and the working capital at completion date.

The agreement, which is in line with the company's current strategy, aims at focusing and expanding in the plastics sector, both inside and outside the Kingdom or in the countries where the company operates, in addition to partnering with leading global non-woven industry players to expand its operations, the statement added.

The transaction’s completion date could be on or after March 31, 2021, thus, the indicative financial impact was calculated based on the unaudited financial statements as of Nov. 30, 2020, and the indicative financial impact is as follows:

1) The book value of the 70% ownership in SAAF as of Nov. 30, 2020, is around SAR 105.8 million.

2) The net capital gain resulting from the transaction after writing off part of the dues to Takween as stated in the agreement is about SAR 57.6 million (net result in the income statement).

3) According to the agreement, SAAF will reimburse the actual working capital to Takween. According to the indicative financial statements, this value was SAR 101.5 million as of Nov. 30, 2020.

4) The transaction total cash inflow between the net purchase price amount and the reimbursement of the working capital will be SAR 293 million.

5) The final financial impact will be reflected in the statements after completion of the transaction.

All values are subject to change at the completion date, the firm said.

The deal is subject to several conditions, including obtaining the approval of the relevant governmental authorities, in particular, approval of the General Authority for Competition.

Both Takween and JOFO have the right to terminate the agreement if the conditions are not satisfied by May 31, 2021.

At completion of the transaction, JOFO will own 70% in SAAF, and will enter into a shareholders’ agreement with Takween. There are no related parties and any material developments will be announced promptly, Takween added.

In June, Takween Advanced Industries Co. signed a non-binding memorandum of understanding (MoU) with China-based JOFO Nonwoven Co. Ltd. to sell 70% of its subsidiary, Advanced Fabrics (SAAF), according to data compiled by Argaam.