Saudi Arabia’s Almarai, the biggest dairy company in the Middle East, is acquiring the Bakemart business in the UAE and Bahrain at a value of $25.86 million.
Almarai said in a statement to Tadawul stock exchange on Tuesday that it entered into a sale and purchase agreement with Bakemart UAE and Bahrain shareholders to acquire 100 percent of the company on March 15.
Almarai will fully finance the acquisition from its operating cash flow, and the financial impact of this acquisition will be reflected in the company’s next quarterly results. The deal remains subject to regulatory approvals, including a nod from Saudi Arabia’s General Authority for Competition.
“This acquisition will further expand Almarai’s bakery product offering,” Almarai said in the bourse filing. It will also “enhance Almarai’s ability to increase its contribution to the kingdom’s food security, in alignment with the kingdom’s Vision 2030.
Bakemart produces bakery items and frozen foods for the retail and hospitality industry in the Middle East, as well as running a number of its own food retail and cake stores. Founded and managed by TK Khaleel, the company employs about 800 staff with a strong presence in the UAE, Bahrain and Qatar.
Food and beverage companies are increasingly looking to gain scale through acquisitions to diversify product offering and expand their regional footprint to better face the pandemic-induced challenges.
Abu Dhabi-based Agthia Group, one of the Middle East and North Africa’s top food and beverage companies, recently completed its merger with dates processing firm Al Foah. Aghthia also bought Kuwait’s Al Faysal Bakery and Sweets, which quadrupled its business in the country, as part of its strategy to acquire complimentary businesses.
Almarai also increased its stake in the Pure Breed Poultry company in August 2019 and earlier that year fully acquired processed meats company Premier Foods.
In January, the company reported a 7.7 percent jump in its 2020 fourth-quarter net income to $89.57 million. Revenue for the reporting period climbed 3.1 percent year-on-year to $14 billion.
However, it pulled back on investment activity last year amid pandemic-driven business disruptions. Almarai’s investment activity in 2020 dropped 73.2 percent to, representing only 5.1 percent of total revenue, compared to 20.5 percent in 2019.