Savola to spend $100m on agribusiness
Sharm El Sheikh, May 19, 2008
Saudi Arabia's Savola Group plans to spend at least $100 million to buy minority stakes in agribusiness firms in Sudan, Ukraine or Egypt to secure supply of sugar and oils, its managing director said on Monday.
"It is to improve our margin and manage volatility," Sami Baroum told Reuters in an interview at the World Economic Forum.
"When your downstream margins are squeezed, your upstream can make more money and in some areas there's scarcity," he said without elaborating.
The target companies would buy land and develop agriculture infrastructure to grow beet sugar, rice and sunflower for oil production, Baroum said.
Savola aims to double its global sugar refining production capacity to 5 million tonnes a year in the next five years mainly through building new refineries, Baroum added.
"A majority will be done through greenfield capacity. We would do acquisitions to acquire access to markets."
Baroum said the company was waiting for regulatory approval to sell a 30 per cent stake in fast-food chain Herfy Food Services Company through an initial public offering.
The stake would be worth $66 million of existing shares. "The IPO would allow us to access capital markets for further growth," Baroum said.-Reuters