Raoum Trading Company, listed on the Saudi Stock Exchange, announced in an official statement today, Tuesday, significant developments regarding its potential acquisition of Mahrakee Trading Company. The company confirmed the extension of the non-binding memorandum of understanding signed between the two parties, which aims for Raoum to acquire a 51% stake in Mahrakee, granting it control and management rights should the transaction be completed.
Details of the memorandum extension and timeline
According to a statement published on the Saudi Stock Exchange (Tadawul) website, both parties have agreed to extend the memorandum of understanding for an additional 30 days. This extension is effective from January 7 and is scheduled to end on February 5. This measure is a necessary step to complete the technical and legal procedures related to the transaction and to ensure that operations proceed within the timeframes suitable for both parties.
The two companies had signed the original memorandum on September 9, which outlined the initial understanding. This extension indicates the parties' commitment to moving forward with the deal, while acknowledging the need for more time to finalize the details.
The importance of due diligence in acquisition deals
Raoum clarified that the final decision to proceed with the acquisition depends entirely on the results of due diligence. This stage is one of the most crucial in mergers and acquisitions, as it involves a comprehensive financial, legal, and operational review of the target company. The purpose of this review is to determine the fair value of the company and to ensure that there are no hidden financial obligations or legal risks that could affect the entity's future after the acquisition.
The memorandum of understanding includes strict clauses regulating the confidentiality of information exchanged between the two parties during this sensitive period, to ensure that no data is leaked that could affect the competitiveness of the two companies or the movement of the stock in the market before a final agreement is reached.
The economic context and the potential impact of the deal
This move by Raoum Trading Company comes amidst a dynamic economic climate in the Saudi Arabian business sector, where listed companies are seeking to expand their investment bases and diversify their revenue streams through acquisitions of established and successful entities. Acquiring a majority stake (51%) in Moharki Trading Company will allow Raoum to strengthen its financial position and expand its market share, in addition to benefiting from the operational integration between the two companies' activities.
It is worth noting that the completion of the acquisition is still contingent upon reaching a final binding agreement, in addition to obtaining the necessary regulatory approvals from the competent authorities, such as the General Authority for Competition and the Capital Market Authority, to ensure that the deal complies with the applicable regulations and bylaws in the Kingdom.
