Post-merger Nadec entity to trim costs, boost scale economies: Albilad

National Agricultural Development Co.'s (Nadec) acquisition of Al Safi Danone will create value by trimming operating costs and expenses, and boost economies of scale for the resulting entity, Albilad Capital said in a new report.

"The merger supports market competitiveness and financial position of the unified entity, and adds a wide range of new products to Nadec's portfolio," the report added.

Earlier this week, Nadec signed agreement to take over Al Safi Danone in exchange for issuance of new shares for shareholders of Safi Danone.

The dairy producer incurred a net loss of SAR 6.26 million in Q4 2017 versus a net profit of SAR 7.6 million a year earlier. In Q3 2017, the company reported a net profit of SAR 17.33 million.

Full-year profit, however, fell by 58 percent to SAR 40 million compared to SAR 94 million in 2016, the report said.