NADEC says agreement terms for flour mill acquisition become binding

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National Agricultural Development Co. (NADEC) announced that the terms of the agreement to acquire the Second Milling Co. have become binding on the consortium members following the award of the joint bid.

The company said in a bourse statement that the consortium members will establish a limited liability company to complete the acquisition, whereby NADEC will own 10% of the capital.

The acquisition transaction is intended to be financed through a combination of self-financing by the consortium members and borrowing from local banks.

The consortium members will complete the final negotiations regarding the agreement within a period not exceeding three months from the date the results of the joint bid were released.

The term sheet further contains several terms and conditions agreed by the consortium members regarding the commercial business, administrative services, and operational services of the Second Milling Co.

They are proposed to include an offtake agreement to govern NADEC’s purchase of certain products from the Second Milling Co. as well as a services agreement pursuant to which NADEC will provide certain management, marketing and support services to the Second Milling Co., all in accordance with what will be negotiated and agreed upon in the final agreements.

The consortium members will complete negotiations and enter into the final agreements which will govern the formation, management, and operation of the company as well as the management and operation of the Second Milling Co.

NADEC will announce any further material developments, including details of the terms agreed upon in the final agreements, as required by the relevant rules and regulations.

Sulaiman Al Rajhi Holding Co., as represented on the board of directors of NADEC by Bader Abdulrahman Alsayari, is a related party, due to its percentage ownership in Al Rajhi International for Investment Co.

According to data compiled by Argaam, NADEC entered a term sheet on April 19, 2021, with consortium members - OLAM International Limited, Al Rajhi International for Investment Co., and Abdulaziz Alajlan & Sons Co. for Commercial and Real Estate Investment - to acquire a flour mill of the two offered for privatization by National Center for Privatization & PPP (NCP) and the Saudi Grains Organization (SAGO).

The joint offer was submitted to the SAGO on April 19, 2021, after NADEC’s board agreed today on the term sheet, joint bid submission, as well as disclosing directors’ interests.

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