Maktoob Business - January 3, 2009
Savola Group Co, Saudi Arabia's largest food company, said Sunday it entered in a sale and leaseback deal with Al Rajhi Capital worth 299 million Saudi riyals ($79.73 million) covering its supermarket chain's main warehouse in Riyadh.
The deal will generate SAR55 million in capital gains for Savola and will be used to cover the lease payments and will not boost its net profit in 2009, the company said in a statement on the Saudi bourse Web site.
The contract, inked Saturday between Savola's subsidiary Al Matoun International for Real Estate Investment Holding Co and Al Rajhi Bank's corporate finance unit, for the sale of supermarket chain Al Azizia Panda United Co's central warehouse in Riyadh, is part of a wider strategy to sell real estate assets to free up cash to invest in core businesses, the company said.
Savola has the right to lease the property for 18 years with a 7 year extension option, the company added.
In July, Savola paid SAR440 million to buy Fawaz Alhokair Group's Geant hypermarket chain. The company said the acquisition will boost its share in Saudi's retail market-estimated at SAR96 billion-from 7% to 8% as part of its strategic target to have a 10% market share within the coming five years.
The expansion was expected to increase sales by 13%.
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