الرئيسية
DUBAI, United Arab Emirates (AP) — Saudi Arabia's largest dairy
company said Wednesday it is buying Argentine farm operator Fondomonte
S.A. for $83 million to secure access to a supply of animal feed.
The
acquisition will give Riyadh-based Almarai Co. control of roughly
30,000 acres of farmland in the South American nation just ahead of
tough new limits likely to be imposed by Argentina's government on
foreign ownership of productive land.
Almarai said the deal is in line with the desert kingdom's policy of "securing supplies and conserving local resources."
Despite
its scorching desert climate, Saudi Arabia for decades produced
millions of tons of homegrown wheat with the help of generous farm
subsidies. It is now trying to wind down domestic production because of
concerns over dwindling water supplies.
Fondomonte operates three
farms dedicated to producing corn and soybeans, according to Almarai.
The Argentine company's website says it also grows barley, rice and
sorghum.
Almarai said it plans to use the crops to feed chickens and cattle.
It
expects to pay for the deal using in-house cash and loans based on
Islamic principles, which generally prohibit the paying of interest.
"This
is a relatively significant move, that they're actually acquiring a
company," said Farouk Miah, an analyst at NCB Capital in Riyadh. "If
anything, I think this is the beginning of a trend."
The Saudi
purchase was announced as Argentina's Senate prepared Wednesday to
approve strict new limits on foreign land ownership, designed to protect
the South American country's food resources.
The proposed law,
already passed by the House, would limit individual foreign ownership of
rural land to 2,500 acres per titleholder, and bar any more purchases
by foreigners once 15 percent of Argentina's land is foreign owned.
company said Wednesday it is buying Argentine farm operator Fondomonte
S.A. for $83 million to secure access to a supply of animal feed.
The
acquisition will give Riyadh-based Almarai Co. control of roughly
30,000 acres of farmland in the South American nation just ahead of
tough new limits likely to be imposed by Argentina's government on
foreign ownership of productive land.
Almarai said the deal is in line with the desert kingdom's policy of "securing supplies and conserving local resources."
Despite
its scorching desert climate, Saudi Arabia for decades produced
millions of tons of homegrown wheat with the help of generous farm
subsidies. It is now trying to wind down domestic production because of
concerns over dwindling water supplies.
Fondomonte operates three
farms dedicated to producing corn and soybeans, according to Almarai.
The Argentine company's website says it also grows barley, rice and
sorghum.
Almarai said it plans to use the crops to feed chickens and cattle.
It
expects to pay for the deal using in-house cash and loans based on
Islamic principles, which generally prohibit the paying of interest.
"This
is a relatively significant move, that they're actually acquiring a
company," said Farouk Miah, an analyst at NCB Capital in Riyadh. "If
anything, I think this is the beginning of a trend."
The Saudi
purchase was announced as Argentina's Senate prepared Wednesday to
approve strict new limits on foreign land ownership, designed to protect
the South American country's food resources.
The proposed law,
already passed by the House, would limit individual foreign ownership of
rural land to 2,500 acres per titleholder, and bar any more purchases
by foreigners once 15 percent of Argentina's land is foreign owned.