Fawaz Alhokair to buy Innovative Union for SAR 340 mln

Fawaz Abdulaziz Alhokair Co. signed an agreement on August 3 to fully acquire Innovative Union Company, owned by Food and Entertainment Company, for SAR 340 million, it said in a bourse statement on Monday.

The company has appointed Swicorp as financial advisor, Turkistani & Alabbad Law Firm as legal advisers, PWC as financial due diligence advisers and Advention Business Partners as market due diligence advisers.

Innovative Union Company has been valued using multi-criteria valuation approaches such as discounted cash flow and multiples.

The agreed transaction value of SAR 340 million will be settled by Fawaz Abdulaziz Alhokair by way of exchange of some non-core receivables as reported on its balance sheet as of end of March 2019 with Food and Entertainment Company Ltd. It will not make any cash payment for the transaction, the statement said.

The transaction is expected to generate additional value for shareholders of Fawaz Abdulaziz Alhokair, such as expansion in the food sector, create strong growth potential in order to open 80 new branches during the next five years, improve the capital structure through the acquisition of debt-free assets and expected contribution to its earnings per share from the first year of acquisition.

Innovative Union Company specializes in food industry and services through international agencies and currently manages 10 brands and more than 200 branches around the Kingdom.

The acquisition is considered a related-party transaction as Saudi FAS Holding Company, which owns shares in Fawaz Abdulaziz Alhokair, also indirectly owns Food & Entertainment Trading Co. Ltd.