Thoub Al-Aseel, a leading ready-to-wear clothing company in Saudi Arabia, announced the signing of a non-binding memorandum of understanding with Al-Tuwaijri Men's Accessories Company to explore a potential acquisition of all shares in Al-Tuwaijri. This move is part of Thoub Al-Aseel's ambitious expansion strategy to strengthen its leading market position and broaden its business scope.
According to the official disclosure published on the Saudi Stock Exchange (Tadawul), the memorandum was signed on February 9, 2024, and extends for a period of six months, renewable with the consent of both parties. This memorandum establishes a preliminary framework for discussions and due diligence, which will determine the final value and financing structure of the potential transaction.
General context and importance of the deal in the Saudi retail sector
Both Al-Aseel and Al-Tuwaijri are long-established and trusted names in the Saudi men's fashion and accessories market. Al-Aseel, founded in 1987, has become synonymous with quality in men's thobes and underwear and is a publicly traded company on the Saudi Stock Exchange. Al-Tuwaijri, for its part, has built a strong reputation over decades in providing other men's accessories such as shemaghs, ghutras, and underwear, and boasts an extensive distribution network. This potential acquisition represents a merger of two complementary entities, creating a powerful conglomerate that will control a significant market share in this dynamic and rapidly growing sector, driven by high purchasing power and a young demographic in the Kingdom.
Expected impact and strategic dimensions
The completion of this transaction is expected to yield several strategic benefits for Al-Aseel. First, it will significantly diversify its product portfolio, enabling it to offer integrated solutions to Saudi and Gulf consumers under one roof. Second, the acquisition will strengthen the combined company's distribution network and retail channels, enhancing its operational efficiency and expanding its reach to a wider customer base. Financially, this move is likely to positively impact Al-Aseel's future revenues and profits, boosting its market value and attractiveness to investors. Furthermore, this transaction aligns with the goals of Saudi Vision 2030, which aims to build strong national entities capable of competing regionally and globally.
Further details regarding the memo and next steps
The memorandum of understanding includes standard provisions such as exclusivity and confidentiality, as well as restrictions on certain material activities during its term. Al-Aseel clarified that it will appoint specialized advisors to conduct due diligence, which will encompass the financial, legal, and operational aspects of Al-Tuwaijri Company. The financial consideration for the transaction will depend on the results of this valuation and will be funded either through an increase in Al-Aseel's capital and the issuance of new shares, through the company's cash flows, or a combination of both. The finalization of the transaction is subject to obtaining the necessary regulatory approvals from the relevant authorities, in addition to the approval of Al-Aseel's Extraordinary General Assembly.
