Jahez signs SPA to buy The Chefz SPV for SAR 325 mln in cash, new shares

Logo of Jahez International Company for Information System Technology

Jahez International Company for Information System Technology signed, on Nov. 29, a share purchase agreement (SPA) to acquire 134,620 shares in The Chefz SPV Ltd, representing a 100% stake.

The SPA was signed with Abdulrahman Abdullah Alshabanat, Abdulrahman Ahmed Almarshed, Abdullah Mohammed Aldosari, Saqr Fund L.P, Impact46 Seed Fund/Impact Seed Fund Co., and Muthmir for Investment Co.

In a statement to Tadawul, Jahez said based on The Chefz equity valuation of SAR 650 million, the transaction will include a cash consideration of SAR 325 million and an in-kind consideration through the issuance of new shares in Jahez to the sellers (excluding SAQR Fund L.P.) at SAR 325 million calculated based on the volume-weighted average price of the shares of Jahez for the five-month period preceding the signing of the SPA.

In addition, the founding members of The Chefz are to receive an earn-out amount equal to SAR 100 million in cash, subject to various performance-related targets being attained over an earn-out period from Jan. 1, 2022 to Dec. 31, 2022, as agreed between both the founding members of The Chefz and Jahez.

Jahez valuation is calculated using the volume-weighted average price of its shares for the five-month period preceding the signing of the SPA, which represents an equity value of SAR 9.047 billion, or SAR 862 per share.

The new shares issued in Jahez will represent less than 5% of Jahez share capital upon the deal completion.

When the acquisition is finalized, Jahez capital will be increased from SAR 104.92 million to SAR 108.69 million by issuing 376,879 new shares at a par value of SAR 10 each in favor of the sellers, excluding SAQR Fund L.P.

Accordingly, the number of its shares will increase from 10.49 million to 10.87 million, representing 3.6% of Jahez capital before the issuance of new shares.

Upon the deal completion, Jahez will own the entire share capital of The Chefz, while the percentage of direct and indirect ownership by the sellers (excluding SAQR Fund) in Jahez will stand at 3.5%. This will result in a decrease in the voting power of the current shareholders in Jahez, as well as their ability to influence decisions that require the approval of Jahez’s shareholders.

The Chefz is the owner of the Best Chefs Catering Company, the operating company of The Chefz application https://thechefz.co/ for food delivery, sweets, flowers and perfumes, which serves the major cities in the Kingdom of Saudi Arabia.

The transaction will allow Jahez to complement its leading food delivery platform in quick service, with The Chefz’s offerings in fine dining, confectionery, and leisure goods.

Upon the deal completion, the ownership percentage of the current shareholders in Jahez (excluding direct and indirect ownership of the sellers (excluding SAQR Fund L.P.)) will decrease from 78.2% to 75.5%. As a result, the current shareholders in Jahez will have less voting power and less ability to influence decisions that require the approval of Jahez's shareholders.

The acquisition deal completion will be subject to satisfaction of certain regulatory and corporate conditions, in addition to certain conditions which resulted from the due diligence exercises carried by Jahez over The Chefz.

The SPA includes customary fundamental, business and tax warranties granted to Jahez in connection with the business affairs of The Chefz.

Moreover, The Chefz will continue to be independently run and managed by its founding executive and management team, including the chief executive officer and its head of business development. The Chefz will continue to manage and operate its online e-commerce platform https://thechefz.co/en/.

Jahez will announce the closing of the acquisition deal or any related material updates in due course.

The deal involves potential interests of related parties, as Abdulaziz Abdulrahman Al-Omran is a representative of Impact Finance Private Equity Fund - Information Technology and E-Commerce Sector in Jahez’s board of directors, and holder of units in several funds through Impact46, which in turn owns shares in The Chefz. Additionally, Abdullah Alromaih is a representative of Impact Finance Private Equity Fund - Information Technology and E-Commerce Sector in Jahez’s board of directors.

The SPA shall terminate in the event that the conditions precedent are not fulfilled within 150 days from the date of signing.

The deal is likely to be closed in Q1 2023. The deal is subject to some conditions that include obtaining the approval of the Capital Market Authority (CMA) for the deal and the shareholders’ circular; the approval of the Saudi Exchange (Tadawul) to list the new shares resulting, the approval of the extraordinary general meeting (EGM) of Jahez, the approval or no objection letter of the General Authority for Competition (GAC), and any other necessary or appropriate approvals in relation to the deal.

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