Al-Munajem Food Company announced a significant strategic move aimed at strengthening its presence in the Saudi market, revealing that it has begun preliminary, non-binding discussions with Al-Jouf Agricultural Development Company. These discussions aim to explore the possibility of Al-Munajem becoming a strategic investor by acquiring a minority stake in Al-Jouf Agricultural Development Company through a capital increase mechanism, with the existing shareholders' pre-emptive rights waived, in accordance with Article 129 of the Companies Law. The proposed subscription price has been set at SAR 52.5 per new share.
This move comes at a crucial time as the food sector in Saudi Arabia undergoes major transformations in line with the Kingdom’s Vision 2030, which prioritizes food security. Al-Munajem Foods, one of the region’s largest food companies, aims to achieve vertical integration in its supply chains. Through its partnership with Al-Jouf, which possesses vast agricultural production capabilities, Al-Munajem can secure reliable local supply sources, reducing reliance on imports and enhancing the stability of its value chains.
From an economic perspective, this potential alliance represents a model of integration between major market players. Al-Manjam possesses a vast logistical distribution network and extensive marketing capabilities, while Al-Jouf Agricultural is a leader in agricultural production, particularly in the olive, potato, and fruit sectors. This synergy between production and distribution would create a stronger and more resilient entity, better equipped to withstand the volatility of global markets and food prices, thus delivering long-term value to the shareholders of both companies.
In a related development, Al-Jouf Agricultural Development Company confirmed receipt of the letter, noting that these discussions are still in their preliminary stages and do not constitute a final legal commitment at this time. The company clarified that the completion of the transaction is contingent upon the completion of due diligence studies, agreement on final terms, obtaining the necessary regulatory approvals from the Capital Market Authority and other relevant authorities, and approval by the company's Extraordinary General Assembly. This reflects both parties' commitment to the highest standards of governance and transparency.
It is worth noting that the Saudi food sector is witnessing active investment, supported by the Public Investment Fund's initiatives and government policies that encourage investment in sustainable agriculture and food processing. This potential deal is a positive indicator of market maturity and the ability of national companies to build strategic alliances that support the national economy and provide high-quality products to local consumers.
