Savola’s subsidiary to exit business in Iran for SAR 705M

Savola Group signed a binding sale and purchase agreement (SPA) through its fully owned subsidiary, Savola Foods Co. to sell its entire business in Iran for SAR 705 million.

In a statement to Tadawul, Savola said the agreement was signed with a foreign buyer, which is not a related party. The deal includes the sale of Savola Foods’ operations, which include the manufacturing and distribution of cooking oils, seafood, baked goods, and confectionery, in Iran.

The unaudited net book value of the operations and investments in Iran amounted to SAR 656.5 million as of Nov. 30, 2024. The difference between the deal value and the book value of operations in Iran, after deducting transaction costs, will lead to a total profit of nearly SAR 2.8 million.

The deal proceeds will be used to strengthen the group's financial position.

Savola explained that the transaction, based on IFRS, will also result in reclassification of foreign currency translation reserve (CTR) and effect of transactions with non-controlling interests without change in control, relating to investments in the Iran operations, amounting to SAR 1.3 billion and SAR 251 million, respectively, as of Nov. 30, 2024, from equity to profit or loss. This will lead to an estimated net loss of SAR 1.6 billion on the transaction.

Savola’s divestment of Iranian operations aligns with its ongoing prudent strategy to exit non-core markets. The decision reflects the group’s commitment to enhancing value and reallocating resources toward high-potential markets and growth-oriented investments in its food platform.

The edible oil producer earlier exited Morocco and Iraq in 2023.

There are no related parties to the agreement, Savola added.