Sats to Divest 49% Stake in Saudi Arabia Cargo-Handling Subsidiary
Strategic Move to Capitalize on Market Opportunities
Singapore-based in-flight caterer and ground handler Sats is set to divest 49% of its interest in its Saudi Arabia cargo-handling subsidiary to a locally incorporated private limited company, Avilog Logistics Services, for S$52.6 million.
Transaction Details
Under the share purchase agreement, Sats and its wholly-owned subsidiary Sats Airport Services (SAS) will sell their combined 49% stake in the Saudi Arabian unit to Avilog, a consortium of shareholders Albawardi Holding Group and Abdulkadir Al Muhaidib and Sons. This transaction is expected to enhance the unit’s growth prospects and expand its logistics services.
Benefits of the Transaction
The deal is expected to accelerate growth, with the combined resources of Sats and Avilog helping to improve market effectiveness and expand logistics services. The new Jeddah facility will be a key focus area, with the aim of enhancing air cargo and multimodal operations.
Saudi Arabia’s Growth Prospects
Saudi Arabia is expected to experience substantial growth in passenger traffic and cargo handling by 2030, aligning with the government’s Vision 2030 program to establish the kingdom as a global logistics hub. The local unit’s growth is expected to benefit from this trend.
Additional Cash Payment
Sats and SAS may receive an additional cash payment of up to S$70.2 million, subject to the Saudi Arabia subsidiary achieving certain performance objectives.
Conditions of the Deal
The deal is contingent upon the contracting parties agreeing on the subsidiary’s earnings before interest, taxes, depreciation, and amortization for the fiscal year ending March 31, 2027. The unit must also achieve its agreed-upon performance objectives as per the terms of the agreement.
Financial Details
The book and net tangible asset values of the sale shares are approximately S$21.1 million and S$20.8 million, respectively, based on the unaudited consolidated financial statements of the group for the financial period ended September 30.
Stock Performance
Sats shares closed on Monday at S$3.86, up S$0.02 or 0.5%.
Conclusion
This strategic move by Sats is expected to position the company for growth and expansion in the Saudi Arabian market, while also enhancing its position as a leading player in the region.
Frequently Asked Questions
Q: What is the purpose of Sats’ divestment in its Saudi Arabia cargo-handling subsidiary?
A: The divestment is part of Sats’ strategy to capitalize on market opportunities in Saudi Arabia and present favorable market conditions.
Q: Who is Avilog Logistics Services, and what is its role in the transaction?
A: Avilog is a locally incorporated private limited company, owned by a consortium of shareholders Albawardi Holding Group and Abdulkadir Al Muhaidib and Sons. The company will acquire a 49% stake in Sats’ Saudi Arabia cargo-handling subsidiary.
Q: What are the conditions of the deal?
A: The deal is contingent upon the contracting parties agreeing on the subsidiary’s earnings before interest, taxes, depreciation, and amortization for the fiscal year ending March 31, 2027, and the unit achieving its agreed-upon performance objectives.
