Mezzan Holding acquires majority stake in Al Safi Food Company, announces plans for new food manufacturing plants in KSA

Transaction highlights:

• Mezzan Holding has acquired a 70% stake in Al Safi Food Company through a capital injection of SAR90.75 million (KD7.3 million) today.
• Al Safi Food Company is a Riyadh-based start-up food manufacturing company established by Al Faisaliah Group in January 2014 and commenced operations in May 2015.
• Al Safi Food Company has over 70,000 sqm of land on a long-term lease.
• Mezzan Holding plans to invest in food manufacturing facilities in Saudi Arabia to serve Saudi and neighboring markets. The capital injection includes planned capital expenditures leading up to end of 2017. 
• Al Safi Food Company is expected to contribute between 5% and 10% to Mezzan Holding top-line earnings in the next two years.

Dubai, UAE, August 24, 2016:  Mezzan Holding, one of the largest food, beverage, FMCG and pharma manufacturing and distribution companies in the Gulf, has completed its acquisition of 70% of KSA-based Al Safi Food Company today, effectively granting Mezzan Holding a local platform to manufacture and distribute food and beverage products in the Kingdom.

Based in Riyadh, Al Safi Food Company is a start-up food manufacturing company established by Saudi Arabia’s Al Faisaliah Group in January 2014 and operated in May 2015. The Al Faisaliah Group, a leading diversified business group, will continue to be part of the Al Safi Food Company with the remaining 30% stake. 

Mezzan Holding, a Kuwait Stock Exchange-listed company, acquired the 70% stake through a capital injection of SAR90.75 million (KD7.3 million). Mezzan Holding operates in seven countries through 29 subsidiaries and 7,500 employees, and generates approximately 75% of its revenues through retail-based activities. The capital injection includes planned capital expenditures leading up to end of 2017. 

Mezzan Holding Vice-Chairman, Mohammed Al Wazzan, said, “Saudi Arabia represents a key growth market for our company. We look forward to grow our business in the Kingdom and serve Saudi households with high quality food products along our local partners, the Al Faisaliah Group.”

Mezzan Holding CEO Garry Walsh said, “The acquisition marks our real entry into the Kingdom’s food manufacturing and distribution sector. Though the company was acquired while in a start-up mode, it has a high turnaround potential and will immediately provide a new platform for both margin growth and distribution scale, in addition to complementing our activities in other markets and contributing to the Group’s bottom line starting from 2018 and beyond.

“Our Saudi Growth Strategy leading up to 2018 has three main priorities. Our first priority is to streamline operations by managing operating expenses, raw materials, and SKU rationalization. Our second priority is to introduce Mezzan-manufactured products from other countries, while raising the efficiency and production of Al Safi Food’s baked goods production. Our third priority is deploying the injected capital in expanding new product lines and build new factories to serve Saudi from within Saudi, and serve growing demand in Kuwait and neighboring markets through Saudi.

“By 2018, we expect our Saudi business to contribute between 5% and 10% to our top line, and to grow there as the new Saudi-based food manufacturing facilities that we have planned start production.”

Al Safi Food Company, which will soon be renamed to Mezzan Food Company, will have the right to manufacture, market and distribute food products in the Kingdom of Saudi Arabia. The company was also awarded exclusive rights to continue to manufacture, market and distribute Al Faisaliah Group’s bakery and snacks line, as well as the exclusive rights to import, manufacture, sell and distribute all Mezzan Holding brands. 

Mezzan Holding was advised by Mohammed & Khlood Aldukheil Co. (MKD) and Abdulaziz H. Al Fahad & Partners. Al Faisaliah Group was advised by Abdulaziz I. Al-Ajlan & Partners in association with Baker & McKenzie Limited.