Savola formerly held a 34.52% share in its local peer, but has now decided to sell its stake “to eligible shareholders”, it said in a statement.
The decision is still subject to regulatory approval.
Savola said it expects the move “to unlock value for Savola’s shareholders, who will benefit from direct exposure to the growth potential and future dividend capacity of
Almarai, one of the region’s leading food companies.”
Despite its decision to hand off its shares in the company, Savola added that Almarai had been “one of [its] most successful investments… to date.”
The launch of the rights issue will help it boost its earnings, “while paying down debt”, it said.
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The investment holding company allegedly first signaled its intentions to sell its stake in October 2023.
At the time, Bloomberg reported that Salvola’s stake was estimated to sit at around “$5.4bn”.
Almarai’s portfolio includes yogurts, desserts, labneh, hummus, baked goods, infant formula, dates, seafood and poultry.
Saudi Arabia’s Public Investment Fund holds a 16% share in Almarai through a subsidiary.
The group also sells a range of fresh fruit juices, iced-coffees and iced-teas.
Commenting on the news, Waleed Khalid Fatani, CEO of Savola Group, said: “This transaction is a first of its kind for both Savola and the Saudi capital market, and the Rights Issue and distribution of our stake in Almarai will give our shareholders direct exposure to both our own compelling and growing portfolio and the long-term potential of Almarai.”
Company chairman Sulaiman A. K. Al-Muhaidib added that the move would “provide our shareholders with direct exposure to one of the region’s most loved and trusted food brands.
“Going forward, we will focus on investing in the growth of our core food and retail businesses, whilst continuing to review strategic options to realise value from portfolio companies that demonstrate attractive distribution and monetisation potential.”
The majority of Savola’s food investments go through its subsidiary Savola Foods. In 2022, the investor scooped Cairo-based baking group Egyptian Belgian Company for Industrial Investments.
Almarai booked SR19.6bn in revenue in its financial results for the year ended December 2023, a 4.8% hike on 2022. Its operating profit was up from SR2.3bn to SR2.7bn compared to the previous year.