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Savola headquarters
The Savola Group said that the process of offering rights shares worth SAR 6 billion and distributing all Almarai shares includes three stages: issuing priority rights, which will be followed by a capital reduction, and then distributing the group’s entire share in Almarai Co., amounting to 34.52%, to Savola’s eligible shareholders.
In response to common questions about rights issue and the distribution, the group explained that the three stages will be subject to the approval of the regulatory authorities and the Savola’s extraordinary general assembly, indicating that any essential details will be disclosed as soon as they become available.
Savola said that the goal of this process is to maximize the investment value for shareholders, as the market value (market capitalization) of Savola during the past years was almost equal to the market value of its share in Almarai.
Savola added that it has sufficient cash flows from its operations to meet its existing financial obligations, including debt covenants and terms specified by lenders.
It stated that the evaluation related to priority rights has not yet been determined, and this will be disclosed to shareholders after obtaining the necessary approvals from the regulatory authorities.
The group also indicated that there will be no reduction in the ownership percentage for Savola shareholders who participate in the rights issue process, except that they will receive shares in Almarai, but their failure to participate in priority rights will lead to them obtaining a smaller number of Almarai shares compared to the participating shareholders.
It added that shareholders who will not participate in the rights issue will have their ownership percentages in Savola reduced, will receive a smaller number of Almarai shares compared to participating shareholders, and will also benefit from the opportunity to sell their rights, and the value of these rights will be determined as the implementation stages progress.
In addition, Almarai’s investment will be recorded in Savola’s financial statements as an investment in an associate, and flows from Almarai will be recorded in Savola’s operating income.
Savola’s investment in Almarai is considered one of its most successful investments to date, as the value of Savola’s investment in Almarai has multiplied more than 100 times since the first investment in 1991. Savola’s market value during the past years was directly related to the value of the share held by Savola in Almarai.
Furthermore, Savola added that in the future, it will focus on investing in the development of its main companies in the food and retail sectors, and shareholders will also continue to benefit from this growth directly. It will also continue to study strategic options to achieve and maximize the investment value of the group’s companies, which have attractive opportunities to achieve investment value and additional returns.
It pointed out that Savola’s future investment vision upon completing the process includes the following:
– To be the leading company in the fast-moving consumer goods (FMCG) market in the Kingdom and the Middle East, North Africa and Turkey region.
– A flexible business model based on allocating resource priorities to focus on core operational businesses that have growth opportunities.
– Strengthening cash flows with the aim of strengthening the capital structure and achieving dividends to shareholders.
– Supporting the future M&A strategy and providing the necessary liquidity to finance acquisitions.
The company’s board of directors recommended, on Feb. 6, to increase its capital by SAR 6 billion through a rights issue, which 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., according to data available to Argaam.
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.
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