NADEC, Al Safi Danone to start merger talks

National Agricultural Development Co. (NADEC) has entered into a non-binding memorandum of understanding (MoU) with Al Safi Danone Co. (ASD) to discuss a potential merger, to be executed through a share swap agreement.

The proposed transaction will see NADEC acquire all shares of ASD and offer new shares to ASD’s shareholders in exchange, the Tadawul-listed firm said in a bourse statement.

The new shares will be issued via a capital increase, NADEC added.

Upon completion of the transaction, ASD shareholders will, in aggregate, own 38.75 percent of NADEC’s pro forma issued share capital.

The MoU is valid for six months, the statement said, adding that the parties have agreed on an exclusivity period during which they will conduct financial, commercial and legal due diligence.

The deal will be subject to a number of conditions including entry into definitive agreements, NADEC’s EGM approval, ASD’s shareholder approvals, and regulatory approval.

ASD, which produces fresh dairy products and juices, is a joint venture between Saudi Arabia’s Al Safi Group of Companies and French food company Danone. It was founded in 1979 and based in Riyadh.