Savola Group said it agreed to pay SR440 million ($117.3 million) to buy all Geant supermarkets owned by Fawaz Alhokair Group, absorbing its second retail competitor since 2008. Savola has signed an agreement with the Saudi-based Alhokair to buy Geant supermarket outlets in the Kingdom, it said in a statement posted on the bourse website on Saturday. “We are taking all the Geant stores in the Kingdom, they are 11,” Savola's Chief Executive Sami Baroum told Reuters. The deal will enable Savola's retail arm Azizia Panda to raise to 8 from 7 percent its share of the Saudi retail market and would increase its turnover by 13 percent, Savola said. The cost of the transaction, which Savola said will be self-financed, “does not stretch its finances excessively,” said Laurent-Patrick Gally of the Dubai-based Shuaa Capital. “Savola had SR660 million in cash at the end of the second quarter of 2009 and SR4.9 billion in gross debt,' said Gally, who noted that Savola's 27.9 percent stake in dairy firm Almarai was worth SR4.67 billion. The acquisition would add about SR1 billion to Panda Azizia's turnover, Gally said. The deal gives Alhokair, a retail group and commercial malls developer, the option to buy a 10 percent stake in Azizia Panda three years after the signing of the agreement. “Alhokair is a major retail player with long experience in the development of malls and fashion retail. We want to benefit from this experience,” Baroum said. “Whether he agrees to buy the 10 percent or not, Geant stores will remain with us.” Baroum later told Al-Arabiya television the 10 percent stake in Azizia would cost Alhokair SR340 million. Savola hopes within five years Azizia Panda would take a 10 percent share of the SR96 billion generated in annual sales by the Saudi retail market. “Organic growth will be the way forward for Azizia to get to 10 percent market share. I don't see at this point prospects for new acquisitions,” Baroum pointed out.
