RIYADH, 14 August — Five Saudi companies specialized in supplying fresh dairy products are holding serious talks to merge to form a large company with a capacity to produce 80 million liters of milk annually.
High-level sources, who requested anonymity, told Arab News that the companies engaged in merger talks were Aziziya, Najdiya, Mazraa, Hana and Riyadh dairy farms.
These companies are based in the Central Province and distribute their products all over the Kingdom. The new move, which is expected to increase their market share by 16 percent, was prompted by fall in profits following a price war launched by big firms.
The Ministry of Agriculture has welcomed the merger move by small-scale dairy companies. Abdul Aziz Al-Shethry, deputy minister for agricultural affairs, told Arab News that the move will help them compete with major firms.
The five companies are expected to select a consulting firm this month to assess their assets and take further steps for merger. They are now reviewing offers by six consultancy offices. Officials of the companies have expressed their wish to keep the farms in the existing locations.
Saudi Arabia produces 1.8 million liters of dairy products daily with three major companies — Marai, Safi and Nadec — supplying 1.2 million, 68 percent of the total. The dairy farms were established at a total cost of SR13 billion.
