Red Sea subsidiary inks SAR 14M deal to sell Premier Paint stake

Logo of Red Sea International Co.

Red Sea International Co.’s subsidiary, Red Sea for Building Materials and Equipment Trading Co., signed an agreement to sell its entire 81% stake in Premier Paint Co.

The initial value of the deal is estimated at SAR 14.01 million, Red Sea said in a statement to Tadawul.

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The company will sell 8,100 shares in Premier Paint, which are owned by the subsidiary, with an initial value of SAR 1,730 per share. The final price will be determined according to the mechanism outlined in the share purchase and sale agreement between the subsidiary, Sherwin Williams Cayman Islands Ltd., and Saudi Industrial Paint Co. Ltd. (SIPCO).

The initial sale value amounts to SAR 17.3 million for the shares of Premier Paint, the statement pointed out, adding that 81% of the shares are indirectly held by Red Sea for Building Materials and Equipment Trading, while Sherwin Williams Cayman Islands holds 19% of the shares.

According to the agreement, the initial sale value will be adjusted based on the final accounts, and, therefore, the final value will only be known on the closing date, which is expected to occur before the end of Q1 2025 and will be announced later.

The transaction is in accordance with the rules, regulations, and procedures commonly followed in Saudi Arabia, the statement added.

The parties to the transaction are Red Sea for Building Materials and Equipment Trading (first seller), Sherwin Williams Cayman Islands (second seller), and SIPCO (buyer).

Premier Paint is a limited liability company established under the corporate laws of Saudi Arabia under the commercial registration number 4030035617 issued in Jeddah on Sept. 6, 1982. The company’s main activity is the production of various types of paints, selling paint-related equipment.

The book value of the subsidiary's assets is SAR 6.2 million, while the book value of its liabilities is SAR 27.4 million, according to the consolidated financial data for the period ending Sept. 30, 2024.

The statement noted that the audited financial statements for Premier Paint were not published because it is a limited liability company.

The purpose of the transaction is to strengthen the company’s financial position, implement its strategy to exit and liquidate the paints business segment, improve liquidity, and focus on more profitable investments.

The positive financial impact of the deal is expected to appear on Red Sea’s consolidated financials in 2025 upon completion of the sale, the statement highlighted, adding that the proceeds from the transaction will be used for general operational purposes.

It is also expected that the sale will be completed after fulfilling all obligations and the closing date will be in Q1 2025.

Further announcements will be issued upon completion of the transaction, the statement added.