National Agricultural Development Co. (NADEC) has signed a memorandum of understanding to buy a dairy cattle herd from Al Othman Agricultural Production and Processing Co. (NADA) at an indicative value of SR370 million, excluding value-added tax.
The Saudi dairy and food producer disclosed the agreement to the Saudi Exchange on Sunday, Mubasher reported. The memorandum was signed on October 22.
The two companies will negotiate three final agreements. The first covers the purchase of the herd. The second sets out NADEC’s use of NADA’s dairy farm and related facilities during a transition period after completion. The third is a long-term contract under which NADEC will supply NADA with raw milk.
NADEC will pay a refundable deposit of SR74 million, equal to 20% of the indicative price. The deposit will be deducted from the total at completion and returned in full if the deal does not go ahead.
The final price is subject to adjustments that the two sides agree in the definitive agreements, the company said.
The memorandum is not legally binding, apart from provisions on negotiation, exclusivity, confidentiality, the deposit and termination. Completion depends on satisfactory due diligence and on approvals from government bodies, third parties and both companies.
NADEC said the signing has no immediate financial impact and that no related parties are involved. It will announce the financial impact once binding agreements are signed.
Earlier this month, NADEC reported a 73% drop in third-quarter profit as maritime disruption raised feed and freight costs.
