By Staff writer
Dubai-based private equity firm and US buyout company TPG reportedly closing in on majority stake in Kudu
Dubai-based private equity firm Abraaj Group and US buyout firm TPG Capital are reportedly closing in on a deal to buy a majority stake in Saudi Arabian fast-food chain Kudu.
Bloomberg cited two sources as saying the transaction, which is expected to be signed by early September, will value Kudu at up to $500 million.
It said Abraaj has teamed up with TPG to benefit from the firm’s experience investing in restaurant chains, including Burger King.
Kudu operates about 200 outlets in the country selling grilled chicken sandwiches, burgers and breakfasts.
In April, it was reported that the joint bid by TPG Capital and Abraaj Group emerged as the favourite to acquire a majority stake in Kudu after the selling shareholders entered exclusive talks with the pair.
Abraaj and TPG are in talks with banks to borrow about SR700 million ($187 million) to finance the Kudu acquisition, sources said in June.
Bloomberg said representatives for Abraaj and TPG declined to comment, while representatives for Riyadh-based Kudu didn’t respond to calls.
Kudu is owned by four individual shareholders, including chairman and chief executive Abdulmohsen Bin Abdulaziz Al Yahya, according to data from Zawya, a Thomson Reuters unit.
Interest in the business has been high, given the kingdom's booming consumer sector - which is benefiting from an increasingly wealthy Saudi population, of which around 60 percent is under 30 years of age.
Other international firms have targeted Saudi-based firms in recent years. Coca-Cola Co paid $980 million in December 2011 for a 50 percent stake in Aujan Industries, one of the largest beverage companies in the Middle East, while in the same year Carlyle bought a 42 percent stake in a Saudi-based food franchise operator that runs Domino's Pizza and Wendy's restaurants in the Middle East andNorth Africa.