National Agricultural Development Company (NADEC) and Al Safi Danone Company (ASD) have entered into a non-binding agreement to explore a possible merger.
“The term of the MoU [Memorandum of Understanding] is for a period of six months. The parties have agreed on an exclusivity period during which they will conduct financial, commercial and legal due diligence,” NADEC said in a disclosure to the Saudi stock exchange.
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Under the MoU, NADEC is proposing to buy all shares of Al Safi Danone and in exchange offer new NADEC shares to Danone’s current shareholders, which will be implemented through a capital increase.
“Subject to confirmation during the due diligence phase, at completion of the proposed merger, the current Al Safi Danone shareholders will, in aggregate, own 38.75 percent of NADEC's pro forma issued share capital,” NADEC told the Saudi bourse.
Al Safi Danone, engaged in the production of fresh dairy products and juices, is a joint venture between Saudi Arabia’s Al-Faisaliah Group and French food firm Danone Group.
“The proposed merger will be subject to a number of conditions including, without limitation, entry into definitive agreements, NADEC's EGM approval and Danone's shareholder approvals and obtaining the necessary approvals from the relevant government authorities,” NADEC said.
“The entry into these discussions does not guarantee that the proposed merger will be completed.”
