NADEC says Food Security Holding inks deal to acquire second flour mill, net profit at SAR 20-25 mln in 2022

National Agricultural Development Co. (NADEC) announced the signing of agreements to acquire the Second Milling Co. (MC2), according to a statement to Tadawul today, July 13.

The agreements include:

1) A share purchase agreement between Food Security Holding Co., the limited liability firm established for flour mills acquisition, with the National Center for Privatization & PPP (NCP) to acquire 51.32 million shares in Second Milling Co., representing 100% of its capital.

2) A shareholders’ agreement between the consortium members related to the company’s operation and management.

3) A distribution agreement between Food Security Holding and NADEC, with respect to the retail products that will be sold and delivered by the company to NADEC exclusively. NADEC will have the right to sell the retail products under its name and logo and using its marketing and sales strategy to customers worldwide for a certain fee.

4) A service agreement between Food Security Holding and NADEC regarding providing marketing and marketing-related services to the former for a certain fee.

5) An operational services agreement between the company and Olam International Group regarding providing operational services to the concerned mill to operate the plant for a certain fee.

The company said it will disclose any material developments, as required by the relevant rules and regulations.

The company expects the financial impact to appear in Q4 2021, and that 2022 will be the first full year of operation.

NADEC expected that the net profit to reach SAR 20-25 million by 2022, and it to grow 10-15% annually during the following years.

The company indicated that there is a related party, Sulaiman Bin Abdul-Aziz Al Rajhi Holding Co., and its representative on NADEC’s board of directors is Bader Al Sayari, according to the ownership ratio of Sulaiman Bin Abdul-Aziz Al Rajhi Holding in Al Rajhi International for Investment Co.

NADEC entered a term sheet on April 19, 2021, with consortium members – OLAM International Limited, Al Rajhi International for Investment Co., and Abdulaziz Alajlan & Sons Co. for Commercial and Real Estate Investment – to acquire a flour mill of the two offered for privatization by NCP and Saudi Grains Organization (SAGO, Argaam reported.

The consortium members will establish a limited liability company to complete the acquisition, whereby NADEC will own 10% of the capital, the company pointed out.