Egyptian Food Makers Rise After Savola Buys Local Company Stakes

Sharkia National Food (SNFC) led gains among Egyptian food producers after Saudi Arabia’s Savola Al- Azizia United Co. bought stakes in two local food companies.

Cairo-based Sharkia climbed to the highest level in more than three weeks. Middle & West Delta Flour Mills (WCDF), a producer of flour, bread and pasta increased 2.6 percent. The benchmark EGX 30 Index retreated 0.8 percent at the 2:30 p.m. close in Cairo.

Savola said its Egyptian unit agreed to buy 78 percent of pasta makers al-Malika and al-Farasha for 556.5 million Egyptian pounds ($93 million). The companies own two factories in Egypt with a production capacity of 120,000 tons per year and a market share of 30 percent, Savola said in a statement today.

“There definitely could be more consolidation in the fragmented food market,” said Wafaa Baddour, equity analyst at Cairo-based investment bank EFG-Hermes Holding SAE. “Speculation will increase regarding possible mergers and acquisitions in the food sector, but it will all depend on each company’s circumstances.”

Sharkia gained 4 percent to 4.91 pounds. Middle & West Delta closed at 46.95 pounds, the highest since July 2008.

To contact the reporter on this story: Ahmed A Namatalla in Cairo at anamatalla@bloomberg.net

To contact the editor responsible for this story: Claudia Maedler at cmaedler@bloomberg.net

Press spacebar to pause and continue. Press esc to stop.

Bloomberg reserves the right to remove comments but is under no obligation to do so, or to explain individual moderation decisions.

Please enable JavaScript to view the comments powered by Disqus.