NADEC signs MoU with NADA for SAR 370M deal to buy dairy cattle

The MoU has no current financial impact, NADEC says

National Agricultural Development Co. (NADEC) signed a memorandum of understanding (MoU) with Al Othman Agricultural Production and Processing Co. (NADA).

The MoU outlines the key indicative terms of the proposed transaction, which comprises three definitive agreements to be negotiated and signed simultaneously, NADEC said in a statement to Tadawul.

Under the first agreement, NADEC will purchase a dairy cattle herd from NADA for an indicative total value of SAR 370 million, excluding VAT, subject to various adjustments to be agreed upon later under the definitive agreements.

The second agreement will regulate NADEC’s use and occupancy of NADA’s dairy farm and related facilities to operate and manage the herd during a transitional period.

The third agreement will provide for the long-term supply of raw milk by NADEC to NADA.

The MoU will expire on the earliest of the following dates: when NADEC and NADA sign the definitive agreements; 12 months after the MoU; or a date mutually agreed upon in writing by both parties to terminate the MoU.

NADEC said completion of the transaction is subject to customary conditions, including, but not limited to, satisfactory due diligence and obtaining any required regulatory or third-party approvals.

The company said the MoU has no current financial impact, except for a refundable deposit of SAR 74 million payable by NADEC to NADA upon signing, representing 20% of the indicative purchase price. The deposit will be deducted from the purchase price upon completion and fully refunded if the transaction does not proceed.

The financial impact of the transaction will be determined upon signing the definitive agreements.

NADEC noted that the MoU is not legally binding on either party, except for certain provisions that create binding and enforceable obligations upon signing. These include the obligation to negotiate the definitive agreements based on the commercial terms set out in the MoU, as well as provisions relating to the term and termination, deposit, exclusivity, costs and expenses, confidentiality, announcements, governing law, and dispute resolution.

Accordingly, signing the MoU does not constitute a commitment to complete the transaction, and there is no guarantee that it will be completed. Completion remains subject to satisfactory due diligence, the finalization and signing of the definitive agreements, and obtaining all necessary regulatory and internal approvals.

NADEC will disclose any material developments regarding the transaction in accordance with the Capital Market Law and its implementing regulations.