Savola has been adding to its shopping cart at regular intervals, and topping the pile at the end of the second quarter was a $117.3 million acquisition deal with Geant supermarkets.

“We are planning further expansion in terms of acquiring assets,” said chief executive Sami Baroum, adding, “This is the time to grab opportunities and acquire assets because we have enough cash.”

The Jeddah-based group hopes to open 12 stores in the kingdom this year enabling its retail arm Azizia Panda to have 120 stores by the end of 2010, doubling its 2008 level.

Savola has signed an agreement with the Fawaz Alhokair Group to buy all Geant outlets in the kingdom, absorbing its second retail competitor since 2008.

“We are taking all the Geant stores in the kingdom; they are 11,” Baroum said.

The deal will enable Azizia Panda, which is owned 80 per cent by Savola, to raise its share of the Saudi retail market to eight from seven per cent and increase its turnover by 13 per cent. Savola hopes that Azizia Panda would take within five years a 10 per cent share of the Saudi retail market, which it estimated to be generating a turnover of SR96 billion ($25.6 billion) per year.

The Geant deal is Azizia Panda’s second acquisition in two years. In February 2008, it announced the purchase of Giant Stores from private Saudi conglomerate Al Muhaidib Group under a share swap deal.

The Geant agreement gives Alhokair, a diversified retailer group and commercial malls developer, the option to buy a 10 per cent 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 per cent or not, Geant stores will remain with us.”
Fawaz Alhokair Group teamed up in 2004 with France’s Casino to bring the Geant supermarket brand to Saudi Arabia. Azizia Panda competes with France’s Carrefour and the local Abdullah Al Othaim Markets.

Growth plans
Savola’s growth plans have been further sweetened by its hopes to begin production at three sugar refineries by the end of 2011 in Egypt. The project involves a $130 million plant to be set up in Alexandria that will produce 200,000 tonnes of sugar beet, Baroum said.

Last year, Savola opened 17 new stores. The group has its stores in Dubai, Qatar and Lebanon.

As part of its efforts to enhance food security in Saudi Arabia, Savola entered into a strategic partnership last year with Egypt’s Al Muhaidib company, incorporating Savola Foods. With this association, Savola aims to strengthen further its international status and its accumulated experience in the edible oils and sugar sectors, and build on its strong presence in the Egyptian and Sudanese markets.

Adding fillip to this initiative is Savola’s plan to increase its world market share of cooking oil from two to 10 per cent within five years.

The company currently owns 15 cooking oil factories in Egypt, Sudan, Morocco, Turkey, Iran, Uzbekistan and other countries.

“As part of our expansion programme, we have decided to purchase farmlands in many countries including Sudan and Egypt, in order to cultivate cooking oil seeds such as sunflower and corn seeds,” Baroum said.

Savola, one of the world’s top manufacturers of branded edible oil and the Middle East’s top sugar refiner, currently has shares of 62 per cent of the edible oils market and 68 per cent of the sugar market in the kingdom as well as 79 retail outlets throughout Saudi Arabia with a hypermarket in Dubai.

The group operates its businesses through four core sectors – food, retail, plastics and franchising. The group has a work force of more than 16,000 employees, around 160,000 shareholders and is listed in the top 20 companies in the kingdom.

Savola has major investments in Almarai (28 per cent), Herfy (70 per cent), and Jordan’s Tameer Company (5 per cent).

The cost of the Geant transaction, which Savola said would be self-financed, “does not stretch its finances excessively,” said Laurent-Patrick Gally of the Dubai-based Shuaa Capital.

The acquisition would add about SR1 billion to Azizia Panda’s turnover, Gally said.