Abu Dhabi-based agri business company Al Dahra International (ADII) is set to acquire 20% stake in India-based Kohinoor Foods (KFL) in a deal estimated to be worth Rs1.12bn ($18.9m).
Under the terms of the deal, Al Dahra will pay Rs160 ($2.7) per share which represents four times Kohinoor Foods' closing price on the stock exchange on 12 July.
The sale is a part of Kohinoor Foods' plan to raise Rs1.6bn ($27m) to Rs1.8bn ($30.3m) through stake sale; however, the company has not disclosed the end use of proceeds.
Following the acquisition, Al Dahra will have an option to acquire an additional 4.99% stake in Kohinoor Foods within six months from the date of completion of the deal.
In addition, the two companies have entered into a joint venture (JV) called Al Dahra Kohinoor, to manage a brown-to-white rice facility in Abu Dhabi. Kohinoor Foods will hold a 20% stake in the JV and will have the right to appoint a director on its board.
The JV will purchase a minimum of 25,000 tons of basmati rice from Kohinoor Foods annually and will have a capacity of 60,000 tons to 100,000 tons, in addition to a storage facility of 30,000 tons.
Al Dahra specializes in the production of agricultural products and animal feed. The company supplies fresh produce, dairy products and commodities to local and regional markets and operates production facilities in the Americas, Europe, Asia and Africa.
Kohinoor Foods is engaged in manufacturing, trading, and marketing food products under the Kohinoor brand in India. The company's product range includes basmati rice, wheat flour, frozen food, spices, cooking pastes and chutnies, namkeens as well as ready to eat Indian curries, meals, and desserts.