SAUDI ARABIA – In a strategic move to strengthen its position in the frozen storage and distribution sector, Almarai Company (SASE:2280) has announced its agreement to acquire Etmam Logistics for US$47.9 million.

The deal, sealed on December 5, 2023, is pending regulatory approvals and will be financed through Almarai’s internally generated cashflows.

Etmam Logistics, a company specializing in frozen storage and distribution capabilities, caught the attention of Almarai due to its potential to enhance the company’s ability to serve customers with an extended range of frozen products across the Kingdom of Saudi Arabia.

The acquisition aligns with Almarai’s vision to accelerate the development of its food service operations, offering a broader product portfolio and driving growth in its poultry business by expanding its presence in the frozen category.

The move is also seen as providing Almarai with a solid foundation for future expansion into additional frozen product categories.

By leveraging Etmam Logistics’ capabilities, Almarai aims to optimize its supply chain, reduce post-harvest losses, and streamline its frozen product offerings.

The acquisition comes at a time when Almarai is exploring various strategic options for its business.

Earlier this year, the company’s top investor, Savola Group, confirmed the exploration of options for its significant 35% stake in Almarai, hinting at potential major changes in the Middle East’s largest dairy firm.

This latest acquisition aligns with Almarai’s commitment to continuous growth and innovation in response to changing market dynamics.

The completion of the Etmam Logistics acquisition is contingent upon regulatory approval, and the company has confirmed that no related parties are participating in the transaction.

This move follows Almarai’s recent approval of a substantial investment of SR405 million (US$108 million) to expand its bakery division.

The investment is set to enhance the capacity of its fresh-bakery business and facilitate entry into the frozen bakery segment, aligning with the company’s commitment to contribute to Saudi Arabia’s food security objectives outlined in its Vision 2030 plan.

In addition, the global and local bakery segment is proving to be a lucrative avenue for Almarai, with baked goods accounting for approximately 13% of the company’s revenue.

The investment reflects the positive outlook for the global bakery and cereals market, driven by preferences for organic and naturally baked goods, demand for sugar-free bakery products, increasing urbanization, and hectic lifestyles, according to a SWOT analysis by GlobalData.