January 3, 2019

Saudi Arabia’s Almarai Group announced it has agreed to sell its 33 percent stake in United Farmers Holding Company to Saudi Agricultural Livestock Investment Company (SALIC) for $28 million.

Both SALIC and Almarai are two of the original consortium owners of United Farmers Holding – which in 2013 acquired Continental Farmers Group (CFG) for $80.2 million.

Founded by CEO Mark Laird in 2006, CFG is a farming business in Ukraine which operates 45,000 hectares of farmland in Lviv and Ternopil Oblast. Now under the control of SALIC, SALIC plans to consolidate CFG’s operations with those of Ukrainian farming company, Mriya, which it acquired for an undisclosed sum in September of 2018.

“Over the next two years, we plan to significantly invest into new equipment, infrastructure, agricultural technology and land bank consolidation as well as work closely with the local management to build the combined Mriya and CFG operations into a World Class farming operation,” said Mark Laird, CEO of CFG in September.

For Almarai, the sale follows upon a difficult year. Listed on the Tadawul Exchange, Almarai was founded in 1977 by HH Prince Sultan bin Mohammed bin Saud Al Kabeer with the goal of transforming Saudi Arabia’s dairy industry to meet the demand from its domestic market.

Now one of the largest dairy companies in the Arabian region, the group has faced recent challenges that include a slowing of the GCC market; structural economic changes including the implementation of a 5 percent value-added tax and an expatriate levy in Saudi Arabia, as well as other issues such as higher energy and transportation costs.

These conditions saw Almarai’s third quarter net profits fall by nearly 5 percent compared to the same quarter a year before, to $169 million, as overall revenue for Q3 2018 was flatlined at $898 million.

The proceeds from the transaction, which will be effective in the Q4 2018 results, will be used by Almarai in support of its business and investments, according to a statement made to the Tadawul stock exchange.

Lynda Kiernan