A memorandum of understanding was signed on Tuesday between Dr. Tawfig Bin Fawzan Alrabiah, director general of Saudi Industrial Property Authority (Modon) and Adeeb Bin Abdul Raman Al-Suwailem, executive chairman of Falcon Financial Services Company to facilitate and support mergers and acquisitions of companies and factories existing inside and outside the industrial cities. Under the MOU, Falcon will provide the financial advisory services for each of these companies, utilizing its efficiency, experience and competence on preferential and competitive terms compared to terms provided by financial services companies competing in the Kingdom. Falcon is considered a financial service company providing integrated investment services, and has experience in the field of the financial advisory services relating to financial structuring services and restructuring of corporate, acquisitions and mergers, management of investments, assets and obtaining the capital funding (either through borrowing or through financing by owners of the project), reviewing business strategies, particularly in the Kingdom of Saudi Arabia and the Gulf Cooperation Countries (GCC). The agreement included the formation of a joint program to conduct a study of the reality of factories to encourage mergers and acquisitions, develop criteria for the selection of projects benefiting from the services of this agreement. Under the accord, Modon is committed to exert efforts within the scope of its work to cooperate with Falcon, to bring together the interested sellers and buyers and to serve as principal point of contact for outside parties and to refer any of the willing potential new customers and their financial advisory projects to Falcon company. More than 6,000 factories with investments exceeding more than SR300 billion will stand to benefit from this agreement. The agreement arises from Modon efforts seeking to support the industrial sector through provision of financial and investment consultations for promotion and to overcome the difficulties that some of the factories face, through the opportunities available for acquisition and merger under the global financial crisis, which has created many opportunities for investors to invest in the industrial sector in the Kingdom as the Saudi economy is one of the strongest economies in the region and the most prominent economy to attract investments. Furthermore, the Kingdom's accession to the WTO makes it imperative for small and medium-sized factories and even the bigger ones to draw together into mass and form larger and stronger entities and have such entities integrated, which would bring positive impact locally and internationally to all factories. Modon Executive Financial Manager Ihsan Bafaqeeh said the types of acquisitions and the possession of shares is witnessing significant inconsistencies in the type and size. The worldwide acquisition of the Saudi companies amounted to more than SR120 billion during the past three years, to include acquisition of Sabic, Saudi Telecom Company (STC) and Al-Marai Company through partial or full possession of international companies. Acquisitions of local companies by international companies during the same period amounted to only SR2 billion, an example of such acquisition is Abraaj Capital Company which acquired 30 percent of Nas Airline. The local-to-local acquisitions for the same period do not exceed SR4 billion, an example of such acquisition is Al-Marai Company's acquisition of Arabian Bakery known as Pluzine. “The agreement which has been signed between Modon and Falcon Company acquires an important and strategic dimension as it represents a partnership of the private sector and the government sector to contribute to the achievement of strategic objectives of the Saudi industry to be main supporter to national product by the year 2020 by benefiting from the large gap in the volume of local acquisitions and mergers compared to Saudi Arabian acquisitions all over the world, especially that of domestic investment opportunities have become more attractive due to the presence of the economic components in the Kingdom and because it is the largest consumer market in the region as well as, the quality characterizing the Saudi industries in the region which enlarge the Saudi industries market to the markets of many countries,” Bafaqeeh further said. He stressed that industrial investments are heading for a very important stage additionally. Modon supports the needs of the private sector to expand the industry field. The MOU is expected to encourage mergers in the industrial sector and create new job opportunities for the citizens of the Kingdom; provide an encouraging investment environment to foreign investors to invest in the industrial sector in the Kingdom by establishing partnerships with international investors; increase economic activities in the industrial cities and the surrounding areas; provide protection and support to the companies to sustain and thus enhance the ability of such companies to generate value-added economy and increase the extent of their contribution in advancing the Saudi economy; contribute to raising and improving the financial level of the merged companies; reduce costs, increase sales and improve quality; develop exports; strengthen and enhance the ability of the companies to grow in regard to size and efficiency; create companies able to meet new economic challenges through restructuring, reorganization and modernization of the factories; assist companies to enter financial markets; strengthen and enhance the industries position to face global competition; invest in research and development; and boost share and attract expertise. __
