Non-binding agreement is signed with Takween Advanced Industries as Savola focuses on core food, retailing sectors
Saudi Arabia's Savola Group has signed a non-binding agreement to sell its packaging business to Takween Advanced Industries, as it moves to focus on its core sectors of food and retailing.
Savola, which reported a 32.4 percent jump in second-quarter net profit earlier this month to SR513.3 million ($136.9 million), said the proposed deal would have Takween acquire the entire share capital of Savola Packaging Co (SPC).
It did not disclose the value of the acquisition, which is subject to various conditions and approvals. The agreement has an initial term of 16 weeks.
According to Savola's 2013 annual report, the packaging unit's consolidated net profit last year fell to SR69.5 millio from SR100 million a year earlier, even though sales increased 6.3 percent to SR1.12 billion.
"During 2013, SPC faced challenges locally and internationally, due to severe pressures on conversion costs and severe competition, (while) the financial crisis in European countries affected exports; political unrest in MENA and currency fluctuations had adverse impacts as well," the report said.
In May, Savola sold its loss-making Kazakhstan edible oil business to a Russian company for SR107 million.
The Saudi firm is a major producer of cooking oil, sugar and other foodstuffs.