Agthia continues to hunt for new deals as acquisitions boost profits

Company reports 17% growth in revenue after Al Foah and Al Faysal integrations

Agthia, which owns the Al Ain, Bayan and Alpin water brands, is included in MSCI Small Cap Emerging Markets index. Sammy Dallal / The National

Agthia will continue to seek opportunities for new acquisitions even as it integrates the four businesses it has bought over the past nine months, chief executive Alan Smith said.

The company attributed an 86 per cent increase in profit for the first quarter of 2021 to Dh49.6 million (Dh13.5m) to the contribution from the Al Foah dates and the Al Faysal Bakery & Sweets businesses, both of which were integrated into the group's results during the quarter. Revenue also rose 17 per cent to Dh665.5m as a result of these deals, Agthia said.

It will add results from Jordan's Nabil Foods in the second quarter and those from Ismail Investments, also known as Atyab, in the third quarter. Both companies offer processed meat products.

"We see opportunities in bringing these businesses together – they're good brands with the opportunity to scale across the GCC," Mr Smith told The National. "But we're still looking at the pipeline [for acquisitions]."

Agthia, an Abu Dhabi-based business that employs more than 4,000 people, last month announced a five-year strategy to become the biggest food and beverage company in the region by 2025. The company owns the Al Ain water, Grand Mills bakery and the Agrivita animal feed brands, among others, but is looking to add other brands and use its distribution network to scale them across the Middle East, North Africa and Pakistan.

The company hired Mujtaba Hussain as head of mergers and acquisitions in October last year and brought in Fabio Cattaneo in March to lead a transformation office that will handle their integration.

Agthia does not have a target for the number of acquisitions planned over the next 12 months, Mr Smith said.

"We don't want to commit to numbers because it really depends on the availability," he said.

"We're looking for brands that are top three in their own markets, we're looking for strong management teams – these are the criteria we're setting down. We're looking for the right assets but also at the right price. And obviously, we're looking at the potential to scale up as well, given the footprint we have," Mr Smith said.

"We've obviously made a pretty solid start in terms of the number of deals we've done over the last nine months. I think what we've demonstrated is our appetite and our commitment to this agenda."

In terms of the location and type of targets, Mr Smith said in its home market it will consider businesses of any size if the brand is strong enough.

"Our view on the UAE is more is more. If there's good opportunities, even if it's on the smaller side ... if we can integrate them and leverage the machine that we have in the UAE, whether it's the management team [or] the distribution infrastructure, that ... is something that's relatively easy to do."

Internationally, however, it will seek bigger targets.

"If you look at what Agthia has done in the past, probably we've bought sub-scale targets and we've then not ended up with the right kind of infrastructure in those markets. We certainly want to scale in markets like Egypt – and that is what Atyab is an example of. We want to scale up in markets like Saudi Arabia and we have scaled up in Kuwait."