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Saudi's Savola says in talks to acquire Kuwait's Americana
August 13, 2014, 6:29 pm
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Major Saudi food producer Savola Group said on Wednesday it had begun preliminary talks on a potential acquisition of Kuwait Food Co (Americana) , one of the Middle East's largest food companies. Savola has attended an investor roadshow held by Americana's management, but talks have not yet reached a stage that would require disclosure, the company said in a bourse filing.

Reuters reported in April that the al-Kharafi family, the billionaire majority shareholder in Americana at 66.8 percent, had hired investment bank Rothschild to explore a possible sale of the business. With a $4.4 billion market capitalisation, Americana is a franchise operator of restaurants including KFC and Pizza Hut, owned by Yum Brands, and Red Lobster and Olive Garden, owned by Darden Restaurants. It also makes food products such as frozen vegetables.

The company, which says it has over 63,000 employees and operates in 13 countries, posted sales of $3.1 billion in 2013 and net profit of $179 million.
Because of hopes for a sale, its shares have surged 25.2 percent since early April, against a 4.2 percent retreat by the wider Kuwait market index. The stock climbed 3.2 percent to a record high in early trade on Wednesday in response to Savola's statement.

Americana officials have consistently declined to comment on acquisition talks, while members of the al-Kharafi family could not be reached for comment this week.

Cross-border merger activity involving two large companies is rare in the Gulf because family owners and governments are often reluctant to cede control of strategic assets.

In addition to Savola, the potential sale of Americana is believed to have drawn interest from major U.S. private equity firms, though it is not known whether any have put together concrete bids. Savola Group, with a stock market value of $11.8 billion, last month reported an estimate-beating 32 percent jump in second-quarter net profit. Its 2013 sales totalled $7.0 billion.

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