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FIPCO acquires full minority stake in FPC Industries
On March 2, 2020, Filling and Packing Materials Manufacturing Co. (FIPCO) signed an agreement to acquire Eirad Investment Co.’s stake in its subsidiary FPC Industries Co.
| Deal Value | Method of Finance | Type | Status |
| - | - | Acquisition | Completed |
The Acquiring Party
| Filing and Packing Materials Manufacturing Co. - FIPCO | |
| Country | Saudi Arabia |
| Status | Listed |
| Argaam Sector | Packaging and containers |
| *Market Cap (Million SAR) | 691.15 |
| *Price/Share (SAR) | 60.10 |
The Acquired Party
| FPC Industries Co. - FPC | |
| Country | Saudi Arabia |
| Status | Unlisted |
| Argaam Sector | - |
| *Market Cap (Million SAR) | - |
| *Price/Share (SAR) | - |
- *Based on the latest data available
Important Dates
| Announced Date | 02-03-2020 |
| Expected date for Completion | 02-09-2020 |
Main Details
Under the acquisition agreement, Eirad Investment Co. will waive its 20% stake in FPC in return of 20% of net profit, as per the audited annual financial statements for a period of 10 years until Dec. 31, 2029.
Note
* FIPCO owns 80% of FPC, which requires quarterly consolidated financial statements of FIPCO, unlike FPC, a limited liability company with a longer grace period for reporting financials. The acquisition will help FIPCO consolidate taxes and Zakat expenses, as the above-mentioned longer grace period might not enable FIPCO to issue its consolidated financials within the regulatory periods.
Moreover, the existence of a partner hinders the consolidation of tax and Zakat expenses, which raises the company’s total expenses.
The consolidation of some units and expenses will increase the management efficiency, boost the decision-making process and limit expenses.
* FPC Industries was set up in January 2017 as a limited liability company. The company was a joint venture between FIPCO and Eirad Investment Co. to manufacture industrial fabrics, including high density PVC coated fabrics, silicone and teflon fabrics (CTF). FIPCO owned 80% stake in the company, while the remaining 20% stake was owned by Eirad Investment Co.
* FIPCO established a 10-year non-competition condition to ensure that Eirad Investment will not, directly or indirectly, run a competitive business over the agreement term.