Raoum Trading Company, listed on the Saudi parallel market (Nomu), announced the termination of the preliminary, non-binding memorandum of understanding it had signed with Moharki Trading Company, aimed at acquiring a 51% majority stake in its capital. The company explained in an official statement that the termination decision came as a result of the two parties failing to reach a mutually agreeable final agreement after a period of negotiations and studies.
Raoum emphasized that terminating this memorandum does not entail any financial or legal obligations for either party, which is common practice in such preliminary agreements that aim to pave the way for due diligence and final negotiations.
Background of the deal and its strategic objectives
The origins of this potential deal date back to September of last year, when Raoum signed a preliminary memorandum of understanding, announcing its intention to expand into the automotive and energy services sector. Mahrakhi Trading Company, a limited liability company, specializes in developing and operating fuel stations, as well as providing quick and light maintenance and car wash services. Had this acquisition been completed, it would have given Raoum a strong foothold in a vital and continuously growing sector, diversifying its revenue streams in line with its expansion strategy in the Saudi market.
The importance of the sector and the impact of the deal's failure
The fuel station and automotive services sector in Saudi Arabia is a vital sector undergoing significant transformation, driven by Vision 2030 initiatives aimed at improving quality of life and developing infrastructure. This market is witnessing a trend towards mergers and acquisitions, with larger companies seeking to incorporate smaller networks to standardize operations and offer integrated and innovative services to consumers.
The failure of this deal represents a shift in Raoum's short-term expansion plans in this sector and may prompt it to seek alternative investment opportunities. As for Moharkari, it will continue its operations independently, with the possibility of exploring partnerships or other offers in the future. This event highlights the complex nature of mergers and acquisitions, which require complete alignment of visions and valuations among the parties involved for successful completion.
