Abu Dhabi to create food and beverage giant under ADQ

Abu Dhabi to create food and beverage giant under ADQ
Abu Dhabi has seen some of its largest firms merge in the last few years in response to an earlier oil price slump. (File/Reuters)
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Updated 06 October 2020

Abu Dhabi to create food and beverage giant under ADQ

Abu Dhabi to create food and beverage giant under ADQ
  • Senaat would own 59.17 percent of the entire issued share capital of Agthia, up from the 51 percent it currently owns

DUBAI: Abu Dhabi plans to combine two food and beverage companies to create a new national champion in the sector, as part of consolidation efforts in the oil-rich emirate led by ADQ, a state-owned holding company.
Industrial conglomerate Senaat, owned by ADQ, has submitted a non-binding offer to the board of Agthia Group, an Abu Dhabi-listed food company, to transfer the majority of Al Foah Company into Agthia, ADQ said on Tuesday.
Al Foah, owned by Senaat, is the world’s largest date processing and packaging company.
“The proposed transaction would combine two leaders in their complementary food and beverage product categories to create one of the top 10 consumer F&B players in the MENA region,” ADQ said in a statement.
The combined entity would become a “domestic champion” in water, dates, flour, and animal feed, it said.
According to the proposal, Senaat would transfer the entire issued share capital of Al Foah to Agthia in exchange of a convertible instrument issued by Agthia to Senaat and convertible into 120 million ordinary shares of Agthia after the transaction is closed.
The price at which the convertible instrument will convert would be 3.75 dirhams per share, implying an equity value of 450 million dirhams ($122.52 million) for Al Foah, ADQ said.
After the transaction, Senaat would own 59.17 percent of the entire issued share capital of Agthia, up from the 51 percent it currently owns.
ADQ, which was established in 2018, owns strategic assets such as Abu Dhabi Ports, Abu Dhabi Airport and bourse operator ADX. It has also built up a portfolio of food and agriculture businesses and recently took a 22 percent stake in Dubai-based courier Aramex.
Abu Dhabi has seen some of its largest firms merge in the last few years in response to an earlier oil price slump.
Efforts have intensified this year, with deals including the consolidation of two Abu Dhabi utilities under ADQ and the combination of national contracting firms in the oil and gas services sector.


Jack Ma video reappearance fails to soothe all investor concerns

Jack Ma video reappearance fails to soothe all investor concerns
Updated 35 min 49 sec ago

Jack Ma video reappearance fails to soothe all investor concerns

Jack Ma video reappearance fails to soothe all investor concerns
  • Ma had not appeared in public since Oct. 24, after he blasted China’s regulatory system
  • Chinese regulators have set about reining in Ma’s financial and e-commerce empires

HONG KONG: Billionaire Jack Ma’s 50-second video reappearance has done little to resolve Alibaba Group’s troubled relationship with regulators that is making some investors hesitate about owning the Chinese e-commerce giant’s stock.

Relief at Ma’s first public appearance added $58 billion in market value on Wednesday as Alibaba’s Hong Kong-listed stock soared, though doubts crept in a day later and the stock fell more than 3 percent as the broader market steadied near two-year highs.

Ma had not appeared in public since Oct. 24, when he blasted China’s regulatory system. That set him on a collision course with officials and led to the suspension of Alibaba fintech affiliate Ant Group’s blockbuster $37 billion IPO.

A source familiar with the matter said Ma cleared his schedule late last year to keep a low profile, prompting discussion at Alibaba about when and how he should reappear to assure investors.

It was decided he should do something that would appear as part of his normal routine, rather than anything overt that could irk the government.

While Ma has stepped down from corporate positions, he retains significant influence over Alibaba and Ant, and the regulatory crackdown on his business empire coupled with his absence was a concern for some investors.

There was skepticism that Ma’s brief reappearance meant all was well with his businesses.

“The coast is not all clear for Alibaba and it is a judgment call whether you believe the company can still thrive in the changing environment,” said Dave Wang, a portfolio manager at Singapore’s Nuvest Captial, which owns Alibaba stock.

“Without some skepticism, the price would be a lot higher,” he said, adding his firm had increased exposure to China and with it Alibaba, which he believes can prosper over the medium to longer term.

Two of the company’s investors in the US who have sold out or reduced positions in Alibaba said they needed more reassurance about the company and the regulatory environment before reconsidering the stock.

“One of our top criteria is leadership and we were investing in Alibaba because I really respect Jack Ma as a leader,” said William Huston, founder and director of institutional services at independent investment advisory firm Bay Street Capital Holdings in Palo Alto, CA, with assets under management of $86 million.

“We all know that just because he showed up ... doesn’t necessarily explain what is going on.”

Huston, whose firm cut its holding in the Chinese firm last year from 8 percent of its portfolio to less than 1 percent, said the halting of the Ant IPO in November had caused uncertainty, and that Alibaba was “not a prudent investment” for it going forward.

David Kotok, chairman and chief investment officer at Cumberland Advisers, Florida, which has about $4 billion in assets, said he held Alibaba last year but also sold as the Ant IPO was pulled.

“When you don’t know what to do in an evolving situation like this you can’t use traditional securities analytics to reach decisions. We are standing aside and watching,” Kotok said.

Chinese regulators have set about reining in Ma’s financial and e-commerce empires since the Ant IPO suspension, which has weighed on its stock that remains below levels prior to the cancelation of the Ant IPO.

“What his actual state is will be completely up to Beijing to reveal to us,” Leland Miller, CEO of US-based consultancy China Beige Book.

“What we do know is whether Jack is running around, Jack is hiding or something else, Alibaba is not in the clear. There is a lot more of the story still to see.”

Some investors are, however, betting on long-term potential for Alibaba in the world’s second-largest economy.

Dennis Dick, a proprietary trader at Bright Trading, who holds Alibaba shares, said he had protected against a potential fall when speculation about Ma’s whereabouts began by buying put options.

He covered those puts earlier in January on a report that Ma was OK and retains a long position in the stock.

“We have been investors for many years ... there’s a very strong team of executives and Alibaba is bigger than just one person,” said a Hong Kong based long-only investor, declining to be named as he was not authorized to speak to the media.