NADEC says MC2 assets transferred to Food Security Holding, ups stake to 14.87%

National Agricultural Development Co. (NADEC) announced that following the transfer of all assets of the Second Milling Co. (MC2) to the Food Security Holding Co., a limited liability firm, the two companies were merged under the name the Second Milling Co. (MC2).

The company said in a statement on Tadawul that Abdulaziz Alajlan & Sons Co. for Commercial and Real Estate Investment purchased the entire share of Olam International Limited.  

MC2 sought to raise its operational capabilities by improving production, marketing and distribution efficiency and reducing expenses associated with service contracts.

Accordingly, the partners agreed to terminate the service agreements that were concluded in the past, including the agreements with NADEC, provided that an amount of SAR 10 million will be paid as a compensation to NADEC in exchange for terminating the following agreements:

A distribution agreement of retail products that will be sold and delivered by MC2 exclusively to NADEC.

A services agreement between the two parties, regarding providing marketing services by NADEC to MC2.

In addition, NADEC raised its ownership in MC2 and signed a share purchase agreement of SAR 2.5 million shares, representing 4.87% of MC2’s capital, from Abdulaziz Alajlan & Sons Co.’ share after transferring shares from Olam International Group.

Thus, the partners’ ownership ratios in MC2 after finalizing the purchasing agreement will be as follows:

- Abdulaziz Alajlan & Sons at 50.13%

- Al Rajhi International for Investment Co. at 35%.

- NADEC at 14.87%.

The statement indicated that the share deal totaled at SAR 40.29 million (calculated at the same value of deal between Abdulaziz Alajlan Olam per share).

The agreement included a number of terms and conditions that regulate the process of completing the share purchase agreement and terminating the distribution and service agreements.

It is expected that the financial impact to impact Q4 2023’s financials.

The company indicated that there is a related party, Sulaiman Bin Abdul-Aziz Al Rajhi Holding Co., and its representative on NADEC’s board of directors is Bader Al Sayari, according to the ownership ratio of Sulaiman Bin Abdul-Aziz Al Rajhi Holding in Al Rajhi International for Investment Co.