Al-Futtaim sets out to buy nearly half of Saudi’s Cenomi Retail: Dubai-based Al-Futtaim Group is in the process of acquiring a 49.95% stake in Tadawul-listed Cenomi Retail in a transaction worth as much as SAR 2.5 bn (USD 667 mn) after inking a share purchase agreement, according to a joint statement. There’s no publicly available information about how Al-Futtaim plans to fund the acquisition. The move is pending regulatory clearance from the Saudi General Authority for Competition.

This is a good fit — what’s surprising is that it’s happening at all: Saudi has traditionally been very protective of its retail market, particularly against what it sees as incursions by UAE operators. But Cenomi Retail has long been struggling and has been mired in a start-stop turnaround bid for years now to little effect. Cenomi Retail shed a portfolio of 16 brands in 2024 and had said it was in the market to offload more than a dozen others. It had previously signaled plans to bring in a strategic investor “to overcome existing challenges.” The acquisition by Al-Futtaim formalizes adding a regional heavyweight to its shareholder base.

Al-Futtaim will loan Cenomi Retail some SAR 1.3 bn to shore up the operator’s balance sheet and give it the firepower it needs to engineer a turnaround before it can start looking at growing once again.

Who’s cashing out? Al-Futtaim is buying shares from Cenomi’s founding shareholders, including members of the Alhokair family — namely Fawaz Abdulaziz Alhokair, Abdul Majeed Abdulaziz Alhokair, Salman Abdulaziz Alhokair — as well as Saudi FAS Holding Company and FAS Real Estate Company.

A premium is the cost of growth in the Kingdom: The UAE-based conglomerate will buy shares in Cenomi Retail at SAR 44 a piece, the statement read, representing a 33% markup to its last closing price on the Saudi bourse.

The transaction could be good for Cenomi Centres, the mall operator controlled by Alhokair family, which has had a conflict of interest in having Cenomi Retail in its tenant pool. Shares of Centres closed up nearly 2% on Tadawul yesterday.

The acquisition could prove smart on Al-Futtaim’s part. Our retail market is still in its infancy, and Cenomi Retail has leases across the Kingdom and in other markets. That sets Al-Futtaim up nicely to shuffle the portfolio with a patchwork of leases on high-traffic retail locations already in place and a handful of new (and overlapping) brands on which to build.

Cenomi Retail was on the ropes financially heading into this transaction: Sustained losses had seen shareholder equity turn negative to the tune of SAR 991 mn according to its latest financial statements (pdf), while liabilities (SAR 5.43 bn) now outweigh assets (SAR 4.42 bn) on its balance sheet. The company was cash-strapped and remains highly leveraged after it made limited progress paying down debt.

Cenomi Retail was in the black in 1Q 2025: The franchiser posted SAR 1.8 mn in net income, compared to a SAR 151.7 mn net loss over the same quarter last year. Revenues rose 11.2% y-o-y to SAR 1.3 bn during the same period.

Market reax: Cenomi Retail’s stock shed 9.95% to close at SAR 29.70 yesterday.

Al-Futtaim has a broad retail portfolio with brands including Zara, Massimo Dutti, and Bershka across the UAE, Saudi, and Egypt as well as Malaysia, Thailand, and Singapore. Cenomi Retail’s brands include Aleph, Cinnabon, Pull & Bear, Subway, and Oysho, among others and has more than 1k stores across 11 countries.

ADVISORS- Lazard is advising Cenomi on the transaction, while JP Morgan is acting for Al-Futtaim.

The story was picked up by Bloomberg and Reuters.

IN OTHER M&A NEWS-

Nomu-listed Lana Medical acquired a 21% stake in Dawam International Industrial Company, a manufacturer of medical and health food supplements, according to a bourse filing. The transaction was funded through internal resources and was valued at no more than 5% of Lana’s 2024 revenues, which totaled SAR 84.1 mn.

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