Saudi Arabian retailer Fawaz Abdulaziz Al Hokair has acquired restaurants and cafes in a deal worth 340 million Saudi riyals ($90.7 million), it said in a bourse filing on Monday.
The company bought 100 per cent share capital of Innovative Union Company owned by Food and Entertainment Company Ltd.
The acquisition is in line with the retailer’s new strategy to expand its food business and will “create strong growth potential for the company with the opening of 80 new branches during the next five years”, it said.
"This transaction comes in a timely manner as a result of the challenges of the current sectors in which the company operates in general, and to take advantage of the growth opportunities expected in the food sector in particular, which will benefit the current shareholders and prospects of the company," said Fawaz Al Hokair.
Fawaz Al Hokair will exchange the sale transaction value with some non-core receivables as reported on its balance sheet as of March 31 with the Food and Entertainment Company. It will not make any cash payment for the transaction, said the company.
The acquisition is considered a related-party transaction as Saudi FAS Holding Company, which owns shares in Fawaz Al Hokair, also indirectly owns Food & Entertainment Company.
The deal will add ten brands and more than 200 branches in Saudi Arabia to Fawaz Al Hokair’s portfolio, it said.
Fawaz Al Hokair is behind a range of fashion and cosmetics brands in Saudi Arabia, including Zara, Bershka, Mango, Massimo Dutti, and Pedro. It currently only operates one food and beverage brand, Costa, in its portfolio.
Innovative Union Company specialises in food industry and services. In the fiscal year ended 2019, it made 355 million riyals in sales and EBITDA of 54 million riyals, said Fawaz Al Hokair in the statement.
($1 = 3.75 Saudi riyals)
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