The two biggest shareholders in Saudi dairy firm Almarai Co saw their stakes in the firm fall by a combined 3 per cent after it completed a $253.2 million takeover of a local listed firm.

Official stock exchange data showed that Prince Sultan Mohamed Saud Al-Kabeer Al-Saud's stake in the company fell to 28.6 percent from a previous 30.2 percent.

Savola Group also saw its stake in in Almarai decline to 26.5 per cent from 27.9 per cent, the data showed.

An Almarai official said the drop was due to the emission of 6 million new shares to help fund the acquisition of Hail Agricultural Development Co  (Hadco) the completion of which was announced by Almarai on Saturday.

"The emission of these shares diluted shareholders' stakes," he said.

Almarai has agreed to pay Hadco shareholders one new Almarai share plus 2.5 riyals for each existing five Hadco shares.

The takeover was completed after Hadco shareholders approved it through both remote voting and an assembly held on Thursday.

The Saudi stock exchange delisted Hadco's shares on Saturday after the takeover obtained necessary approvals from Almarai's shareholders.

The takeover is the first involving two Saudi listed firms.

Mergers and takeovers among listed firms are rare in Saudi Arabia, which has a relatively unstable shareholder base dominated by retail investors and day traders who invest for quick gains.   

The deal allows Almarai to enter the lucrative Saudi poultry business where Hadco is the fourth biggest producer, according to Dubai-based Shuaa Capital.

In addition to being a key domestic player in the poultry business, Hadco produces olives, wheat, dates and grass fodder.
Almarai has its own cattle farms.

Almarai has been diversifying its revenues through acquisitions and has earmarked 6 billion riyals ($1.6 billion) for investments to expand outside the Gulf region. -Reuters