Executive Summary of Offering Document
Majed Al Futtaim Holding LLC
Mergers and Acquisitions (Professor Antoine Gaudemet)
Date: May 2021
Majid Al Futtaim Holding LLC has been operating as a significant holding company established in 1992. The company is based in Dubai. The company’s subsidiaries have developed and own big shopping malls, entertainment hubs, retail stores, and leisure facilities across Europe, Middle East, Africa, and Asia. In addition, Majid Al Futtaim Holding serves customers worldwide on issues concerning real estate. The company, an Emirati holding company, is owned by Majid Al Futtaim Capital LLC, an asset management company operated as the mother company. Al Futtaim Group Company is owned by Abdulla Al Futtaim and run by the vice-chairman Omar, Abdulla Al Futtaim’s son. In 1995, the Al Futtaim Group was recognized as the significant exclusive distributor of Toyota in the whole of United Arab Emirate (UAE). The company has the most shares in the leading auto market, which is above 30%.
Executive leadership is the given ability of the Management or those who direct employees in the Majid Al Futtaim Company to deal, influence and run the individuals in the company. The executive teams have significant roles to play in the company’s development, which includes providing strategic and operational leadership to the employees. Executive teams play a role in setting goals, developing strategies, and ensuring that the procedures are followed effectively. In addition, the executive team plays a role in providing the cultural DNA and organization for the Majid Al Futtaim Company. The company has a strong board of directors that leads in extensive sectors of the company to enable the smooth running of various service industries.
Executive officer of Majid Al Futtaim Company
Ahmed Galal Ismail
He is the Majid Al Futtaim Properties chief executive officer, and he plays his role very correctly. In this role, Ahmed Galal Ismail is responsible for all the Majid Al Futtaim’s communities, malls, hotels, and project management operations.
Chairman of Majid Al Futtaim Company
Sir Michael Rake
The chairman of Majid Al Futtaim holding company is also the Phoenix Global Resources, Great Ormond Street Hospital, and Newday Limited. In addition, Sir Michael Rake is acting as the Non-Executive Director of Huawei Technologies.
Board of Directors of Majid Al Futtaim Company
Sir Ian Davis
Ian Davis is the HC and Remuneration Committee Chairman. He is also the chairman of Rolls Royce Company, an independent Nom-Executive Director of major British Petroleum Company, Johnson & Johnson. In addition, he is the principal Senior Advisor to Apax Partners LLP. During Sir Ian Davis’s career with the Majid Al Futtaim Company, he has served as the consultant of global organizations across the public and private profit sectors.
Tariq Al Futtaim
He is the Non-Executive Director of the group. In addition, Tariq has been involved in the Majid Al Futtaim businesses as acting vice President since the group was started.
Alan Keir is the experienced chief executive of the Audit and Risk Committee Chairman of the Majid Al Futtaim Company.
He is the chairman of First Eastern Investment Group in Hong Kong and a Non- Executive Director.
Lord Stuart Rose as the Non- Executive Director of Majid Al Futtaim Company group.
Luc Vandevelde He is the founder and chairman of Change Capital Partners LLP and the Nom-Executive Director of Majid Al Futtaim Company Group.
Philip Bowman Philip Bowman was the Chief Executive of Smiths Group from 2007-2015 and right now is the Non-Executive Director of the group.
Alain Bejjani Back in 2015, Alain Bejjani was announced as the chief executive officer of the Majid Al Futtaim Holding Company.
Khaled Rabbani Being the principal General Counsel and Interim Company Secretary at the Majid Al Futtaim Holdings, Khaled has generally led the group’s Legal functions at the company.
Senior Management of the group
Zeeshan Ali Khan Founder and the Board Member of Majid Al Futtaim Holdings Company.
Imran Ali Khan He is the Founder and Board Member of Majid Al Futtaim Holdings Company.
Gilles Blanchard, Chairman of the group.
Haider Ali Khan as the CEO of Majid Al Futtaim Holdings Group.
Mother Company Overview
Majid Al Futtaim Capital LLC is a known management company owned by Majid Al Futtaim, the founder, and an Emirati billionaire. Mr. Majid owns a more significant percentage of the company holdings which is 99.6%, and the rest of the rate, 0.4%, is owned by his son Mr. Tariq Al Futtaim. Aside from the company being the top position holder in renowned distributing markets. Majid Al Futtaim Company has three branches apart from the Majid Al Futtaim Holding that help it to run smoothly and effectively. The three other subsidiaries include the Majid Al Futtaim Investment Syria LLC, Majid Al Futtaim Trust LLC, and Majid Al Futtaim Syria for Investment and Development LLC.
Apart from MAFC being able to lead the table as one of the top entrepreneur companies in the competitive markets, it has significant criteria that the stakeholders always follow to remain at the top. The substantial standards and aspects that the Majid Al Futtaim Holding Company has followed that led to its position as the leading regional retail company include the financial strength, the leadership, the market, the portal, and the group.
1 The Group
Majid Al Futtaim founded the Majid Al Futtaim Holdings in 1992, and it has remained the retailing and entertaining giant in UAE. In 1995, the Majid Al Futtaim had operated the center city of Dubai and later opened its very first branch of Carrefour in Magic Planet and Dubai. The Majid Al Futtaim Company has owned and been operating 13 hotels and 26 malls since 2008. The malls and hotels are comprised of the Mall of the Emirates located in Dubai and the Mall of Egypt located in Cairo. For more than two decades, the company has moved into other real estate sectors and businesses dealing in cinemas, operating water parks, and resorts. The Majid Al Futtaim has the exclusive license that has enabled it to run and utilize hypermarkets for French Company Carrefour across North Africa, Middle East, and Central Asia.
Furthermore, the owner of the group, Majid Al Futtaim, has been able to create a joint The Company group had 9.4$ billion in revenue back in 2008 but later on encountered a loss due to the market downturn. However, this did not make the group fall because the son of Majid Al Futtaim, Tariq Majid being the leader on board and executive committee, managed the conglomerate that later published the company’s revenues and profits per year.
In 2018, the Majid Al Futtaim had invested quite an amount in Wadi. Wadi is an online grocery that operates in the whole of Saudi Arabia. The investments were part of the $30 million set aside in the funding round and were to help set up the delivery structure in all the Carrefour stores in Saudi Arabia. In addition, back in 2019, the Majid Al Futtaim Company became the first conglomerate to provide the physical and virtual experiences meant for the multi-channel offerings.
During the division of properties that houses all malls and hotels in the portfolio, it pulled in The Earnings before Interest, tax, depreciation, and amortization (EBITDA) of Dh3 billion. However, the revenues were later in the year 2018 were down 1 percent to Dh4.6 billion. Despite the many emerging macroeconomic conditions, the Majid Al Futtaim witnessed along with strong growth in the grocery retail business. This was the result of the increment of 4% in revenue and 18% increment in EBITDA.
2 The Leadership
Being able to lead a multi-billionaire company needs paramount leadership skills. The Majid Al Futtaim Company Group is led by Ignace Lahoud, the chief executive officer of the company in leisure, entertainment, and cinemas. Ignace’s principal role is to work along with and lead the company’s Leisure, Cinema, and Entertainment business in line with the groups’ written long-term strategic direction together with the growth plan.
3 The Market
2019, the group had advanced the diversification efforts by entering the new countries and expanding footprints in the priority market while maintaining the strong financial discipline. The big plus also comes through the VOX cinemas and its expansion in the Saudi Arabia. At the end the VOX cinemas had increased in double the value of the digital sales compared to the percentage of sales back in 2018.
The Majid Al Futtaim malls had increased the percentage of visitors’ arrival to a 200 million turnout but this was the bad news on the hotel numbers because there was a decrement in the visitors’ turnout.
VOX is planning to open the utmost 600 screens by 2023 in Saudi Arabia, which is the future plan in action. This year, the company is planning to add 87 screens and set them up in different cities for the first time. The towns that are expecting the screen cinemas by VOX include Hail, Jubail, and Tabouk.
4 The Financial Strength
The high-quality assets has remained to be the groups’ key generator of cash flow and profitability in the Majid Al Futtaim Company. The portfolio has mainly comprised of the malls of the prime locations and small secondary malls. This includes the major 13 hotels which are situated in various shopping centers. Later on the premier assets to a 255,000 square meter of the whole of Emirates that is one of Dubai’s key destination malls.
The retail provides a defensive cash flow in 2020 as the Carrefour stores remained open despite the lockdown in various countries due to COVID19. To manage the consumer demand, the stakeholders of MAFR Company have been increasing the fulfillment of the customers and delivery capabilities. Through this, they have managed to open three new centers redeploying employees to various stores in MAFR to bring revenue and geographic diversity into the group.
II The Opportunity Rationale
The groups’ main goal is to aim for the outperformance and remain focused on the stakeholders’ relevance and being a company that can scale businesses and have a long-term sustainable vision. To achieve the stated ambition, the Majid Al Futtaim Company has stated and developed a majorly based growth strategy based on the following three pillars. The first pillar is being able to expand into new verticals. This includes allowing all the diversification opportunities into driving all the synergies and better customer relationships. This involves the company being able to venture into vertical farming, food manufacturing, lifestyle, and fintech. The second pillar is being able to accelerate digitization of existing businesses, and the last post is being able to monetize all the digital assets inclusive of analytics and data.
The major highlights of the Majid Al Futtaim Company include the following;
The group has reported a 3% decrease in revenue and a 27% decrease in the EBITDA to$435.5 million.
All Carrefour’s have reported a 263% increase in online sales.
The company has maintained and maintained BBB credit rating in the latest Standard’s and Poor’s (S&P) reports.
III Deal Structure
The proposed deal:
The Majid Al Futtaim Company is aiming at raising the company’s capital through the growth company acquisition whereby it will restructure the shares into opening up various branches that will aid in achieving the agreed profit percentage.
Number of shares to be offered for sale;
80% of the shares is agreed to remain as the property of the Majid Al Futtaim Company holdings under the new managerial board of leadership while 20% of the remaining shares will be under the MAFC holdings restructured shares.
Alain Bejjani, the CEO of Majid Al Futtaim Company, will continue with being the CEO. This will enable him to lead the expansion plan of the company to greater heights.
Preferred Buyers Profile;
The United Arab Emirates companies that are already operating in the UAE real estate business or the companies willing to support the new MAFC.
Proposed payment terms;
The invested company capital by the acquiring company should be paid through;
-50% in cash after signing the final purchase agreement.
-30% in cash at the start of Majid Al Futtaim Company schedules.
-20% in cash as agreed by both parties.
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