Savola board proposes SAR 6B rights issue, Almarai stake distribution

Logo of Savola Group

Savola Group’s board of directors recommended, on Feb. 6, to increase its capital by SAR 6 billion through a rights issue.

This will allow Savola to strengthen its financial position and continue to invest in growing its portfolio, while paying down its debt. It will also enable the company to distribute its stake in Almarai Co.

Shareholders on the day of the extraordinary general meeting (EGM) that approves the capital increase are eligible for the rights issue, along with those registered with the Securities Depository Center (Edaa) at the end of the second trading day following the EGM, Savola said in a statement to Tadawul.

The EGM date will be announced after securing the regulatory approvals.

The board’s recommendation is subject to the approval of the relevant regulatory authorities and Savola’s shareholders.

Announcements will also be made on appointing a financial advisor for the rights issue and submitting the capital increase application file to the Capital Market Authority (CMA).

Following the rights issue, Savola intends to distribute its entire 34.52% stake in Almarai to Savola’s shareholders, subject to securing the necessary approvals from the relevant regulatory authorities and shareholders, the company noted.

The distribution aims to maximize the value for Savola’s shareholders, who will benefit from direct exposure to the growth potential and future dividend of Almarai, one of the region’s leading food companies. Almarai has been one of the most successful investments for Savola to date, the group stated.

Savola’s Saudi retail segment leader, Panda, has demonstrated healthy recovery in profitability, thanks to a successful Customer Experience (CXR) program. Panda’s future growth strategy centers on sustaining this positive momentum by expanding its footprint and bolstering it with digital initiatives.

Savola said it will consider the listing of Panda in the future, presenting an additional value-creation opportunity for shareholders.

Savola’s long-term strategic focus will be to continue to grow and optimize its portfolio of operating businesses in basic foods and fast-growing value-add food categories, underpinned by its longstanding track record and vast reach within the Kingdom and the MENA region, the statement indicated.

The company further noted that the planned rights issue will be followed by a capital reduction that is subject to regulatory and EGM approvals. This is required to enable the distribution of Savola shares in Almarai.

Any updates in this regard will be disclosed in a timely manner and inline with market regulations, Savola indicated.

According to data compiled by Argaam, Savola responded, in October 2023, to the media reports on the potential sale of its stake in Almarai Co., saying it studies, as an investment holding company, some strategic options and opportunities to deploy and/or reallocate capital to maximize value for shareholders.  

The group emphasized then that no decisions were made at this stage in relation to the potential sale of a portion of its stake in Almarai.

It, however, added this is one of such options under consideration and the group has appointed Moelis & Co. to advise on such an option.

Savola owns 34.52% stake or 345.20 million shares of Almarai.