Almarai Company has evinced interest in acquiring a controlling stake in UAE-based National Food Products Company (NFPC).
NFPC has initiated the competitive sale process for part of its share capital and has informed Almarai to progress with due diligence process.
In December last year, a Reuters report had said that Almarai was one of the companies interested in buying a majority stake in NFPC.
The report, quoting sources close to the deal, had said: "Almarai is looking to spend up to 21bn SAR ($5.6bn) in investment between 2016 and 2020 to expand its business, including in the areas of farming, manufacturing, distribution and logistics."Almarai plans to issues bonds in 2016 in order to meet the capital requirements needed to achieve its growth plans.
NFPC is a major manufacturer and distributor of food and dairy products in the UAE. The brands marketed by it include Milco, Lacnor and Oasis bottled water. It also manufactures packaged products under the MPC label.
Acquiring a majority stake in NFPC will enable Almarai to increase its product offerings, improve chain integration and expand geographical presence.
Almarai recorded a net profit of SAR308.5m ($82.25m) for the first quarter this year, down 36.2% from the fourth quarter of in 2015. However, the revenue was up 0.6% compared to that recorded in the same quarter a year ago.
The company reported a 0.4% drop in its revenue from the dairy and juice segments due to increased energy costs and lack of subsidies.
Almarai's diverse portfolio includes juices, bakery, poultry and infant formula under the brand names Almarai, L'usine, 7Days, Alyoum and Almarai Nuralac. It also manages joint ventures IDJ and Modern Foods Industries (MFI).
