Saudi-based Savola Group has agreed to pay 440 million riyals ($117.3 million) to buy all Geant supermarkets owned by private Fawaz Alhokair Group.
Savola has signed an agreement with Alhokair to buy Geant supermarket outlets in the Kingdom, it said in a statement posted on the bourse website.
“We are taking all the Geant stores in the kingdom, they are 11,” Savola’s Chief Executive Sami Baroum told Reuters.
The deal will enable Savola’s retail arm Azizia Panda to raise to 8 from 7 percent its share of the Saudi retail market and would increase its turnover by 13 percent, the company said.
The deal gives Alhokair, a major fashion retailer and commercial malls developer, the option to buy a 10 percent stake in Azizia Panda three years after the signature of the agreement.
“Alhokair is a major retail player with long experience in the development of malls and fashion retail. We want to benefit from this experience,” Baroum said. “Whether he agrees to buy the 10 percent or not, Geant stores will remain with us”.
Savola hopes that Azizia Panda would take within five years a 10 percent share of the Saudi retail market which it estimated to be currently generating a turnover of 96 billion riyals per year.
“Organic growth will be the way forward for Azizia to get to 10 percent market share. I don’t see at this point prospects for new acquisitions,” Baroum said.
Azizia, which is 80 percent owned by Savola, plans to have 120 stores by the end of 2010, double its level in 2008.
The deal with Alhokair is Azizia Panda’s second acquisition in two years. In February 2008, Azizia announced the purchase of Giant Stores from private Saudi conglomerate Al-Muhaidib Group under a share swap deal. (Reuters)