Subsidiary of Bin Dawood Signs Agreement to Acquire 62% of IATC Capital for SR107.5 mln

The Bin Dawood Holding announced on Sunday that the Buyer, has signed a sale and purchase agreement (the “agreement”) on 24.03.2022 with the sellers to acquire their entire shares in International Applications Trading Company IATC (the “acquired shares”) which represent 62% of IATC’s share capital (the “transaction”).

The agreed consideration for the acquired shares shall be the aggregate of: (i) an initial cash consideration of SR107.5 million subject to net debt adjustment at closing; (ii) a potential additional amount to be paid in 2023 if IATC achieves certain revenue milestones contained in the Agreement for the financial year ending 31 December 2022, and (iii) a potential earn-out amount to be paid in 2026 if IATC achieves certain profitability parameters contained in the Agreement for the financial year ending 31 December 2025.

• The Agreement contains customary representations, warranties and undertakings provided by the Sellers.
• Closing will be subject to certain conditions, including, without limitation, the receipt of the relevant corporate, shareholder, commercial and regulatory approvals for the Transaction.

The initial purchase price of SR 107.5 million (subject to net debt adjustment at closing) for the Acquired Shares will be paid to the Sellers in cash, in accordance with the Agreement. The transaction shall be funded by the Company’s internal resources.

IATC develops and operates online e-commerce platforms and online mobile applications. IATC also provides management of the services relating to the online platforms and mobile applications.

In respect of IATC:

Revenues (In SR):

2019: nil

2020: 23,917,734

2021(unaudited): 11,359,513

Net Income (Loss) (In SR):

2019: (128,852)

2020: 1,154,680

2021 (unaudited): (589,659)

The Transaction is aligned with the Company’s strategic objectives to enhance its position in e-commerce and to strengthen its omnichannel presence. The Transaction is also aligned with the Company’s strategy to create a customer centric offering and experience, thereby gaining insightful knowledge on consumer behaviours and trends, which in turn will help in optimizing the Company’s operations.

The Transaction is expected to be highly value accretive financially in the long term to the Company and its shareholders.

42% of IATC is owned directly by Amwaj Real Estate Company Limited (a related party of BDH) whilst a further 20% is held by First Commercial Applications Company (of which Abdulrazzag Dawood Ibrahim BinDawood holds 50% of the capital). Abdulrazzag Dawood Ibrahim BinDawood is an indirect shareholder of BDH and Chairman of the Board of BDH and is the Chairman of the Board in IATC.

IATC is a related party of BDH on the basis that Abdulrazzag Dawood Ibrahim BinDawood, Abdulkhaliq Dawood Ibrahim BinDawood, Khalid Dawood Ibrahim BinDawood, Tariq Abdullah BinDawood and Ahmad Abdulrazzaq BinDawood (who are Board directors of BDH) have an indirect ownership interest in IATC. Additionally, Ahmad Abdulrazzaq BinDawood is a board member of BDH and IATC.

The Transaction is subject to the fulfilment of the conditions in the Agreement, and completion of regulatory authorizations. The Company will announce the completion of the Transaction or any other material developments in due course. The board members (excluding those having an interest) are supervising the Transaction.

It is intended that the founder and the management team of IATC will remain with IATC. Following the completion of the Transaction, the Company has committed to invest a further amount of up to SR 160 million in IATC over a two-year period to support the development of the platforms and the roll-out of a network of state-of-the-art dark stores and fulfilment centers to optimize operations, fully integrate the customer experience and provide shorter lead delivery times. Such additional investment will increase the Company’s indirect stake in IATC, the precise quantum of which will depend on the valuation of IATC as determined after the finalization of its audited accounts for the financial year ending 31 December 2022.

The Agreement will be presented to the Company’s General Assembly meeting for approval in accordance with the relevant regulations.