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MIDEAST STOCKS-Kuwait Food hits record high after Savola starts takeover talks
August 13, 2014 / 2:37 PM / in 3 years

MIDEAST STOCKS-Kuwait Food hits record high after Savola starts takeover talks

* Kuwait Food 2.6 pct, Savola up 0.7 pct

* Saudi loses steam as oil price slumps to 13-month low

* Abu Dhabi’s TAQA rallies after it swings to Q2 profit

* But regional markets mostly lacklustre

* Egypt up but investors unimpressed by blue chips’ earnings

By Matt Smith

DUBAI, Aug 13 (Reuters) - Shares in Kuwait Food Co (Americana) hit a record high on Wednesday after Saudi Arabia’s Savola Group said it was in preliminary talks to acquire the firm. But Middle East markets were mostly lacklustre as a summer lull deepened.

Shares in Americana, majority owned by the al-Kharafi family, rose 2.6 percent while National Investment Co - another Kharafi company - climbed 5.3 percent.

Savola, a producer of cooking oil, sugar and other foodstuffs, said in a statement to Riyadh’s bourse that it had started preliminary talks on a potential acquisition of the Kuwaiti manufacturer, which has a market capitalisation of about $4.4 billion. Savola’s shares added 0.7 percent.

“There has been universal chatter that the Kharafis want cash and Americana is one of their crown jewels,” said a Dubai-based director of equity sales who declined to be identified.

“For Savola, it should be an attractive asset and complementary to what it’s already doing in Saudi and Iraq in terms of food production and distribution.”

In addition to Savola, the potential sale of Americana is believed to have drawn interest from major U.S. private equity firms, though it is not known whether any have put together concrete bids.

Saudi Arabia’s bourse gave back most of its early-session gains to end just 0.04 percent higher. The market rose for 11 straight sessions to Monday’s six-year peak after authorities said it would open to direct foreign ownership early next year.

But a drop in oil prices now seems to be sapping investor enthusiasm - Brent crude slumped to a 13-month low on Wednesday as ample supplies countered any disruption caused by conflict in Iraq and Libya.

Saudi hospital firm Al Hammadi fell 2.6 percent. The stock, a play on the Saudi health care industry which foreign investors are expected to favour, had been up as much as 8 percent intra-day, but then succumbed to late selling pressure as investors booked profits. Al Hammadi has more than tripled in value since listing in mid-July.

TAQA

Meanwhile, Abu Dhabi National Energy Co (TAQA) rose 2.8 percent, trimming its 2014 decline to 25.8 percent after the state-run firm swung to a second-quarter net profit and announced it was pulling out of some overseas acquisition plans to improve cash flow.

TAQA made a net profit of 239 million dirhams ($65.1 million) for the quarter ended June 30 compared with a loss of 172 million dirhams a year earlier.

Abu Dhabi’s stock index climbed 0.3 percent. This took its 2014 gains to 16.6 percent, but the benchmark is stuck in a sideways trend along with neighbouring Dubai, which slipped 0.1 percent.

“UAE markets are in a summer trough - volumes in the last couple of weeks have been disastrously low,” said the director.

“There’s a lack of investors wanting to take active positions. We’re not seeing large directional flows that could move prices - people are just tweaking their portfolios and the markets should remain listless for a few more weeks.”

The lack of buying interest has meant that second-quarter earnings have had negligible impact, said the director. He cited Air Arabia, whose shares are up just 0.7 percent since the budget carrier posted a 128 percent jump in quarterly profit on Aug. 9, beating analysts’ estimates by a large margin.

EGYPT EARNINGS

Egypt’s market rose 0.2 percent to reach a new six-year peak, although investors were unimpressed by some blue chips’ earnings.

Telecom Egypt’s shares fell 1.1 percent despite the fixed-line monopoly posting a 14 percent rise in second-quarter profit.

The operator proposed an annual cash dividend of $0.05. The previous year’s dividend was 1 Egyptian pound ($0.14), according to Reuters data, which may explain the share price drop.

Talaat Moustafa, Egypt’s largest listed property developer, fell 1.5 percent. It reported a 12 percent rise in interim profit; a note from NBK Capital described the earnings as “an excellent set of results”.

WEDNESDAY‘S HIGHLIGHTS

KUWAIT

* The index rose 0.2 percent to 7,246 points.

SAUDI ARABIA

* The index edged up 0.04 percent to 10,593 points.

ABU DHABI

* The index rose 0.3 percent to 5,003 points.

DUBAI

* The index fell 0.1 percent to 4,805 points.

EGYPT

* The index climbed 0.2 percent to 9,288 points.

QATAR

* The index climbed 1.8 percent to 13,523 points.

BAHRAIN

* The index fell 0.5 percent to 1,470 points.

OMAN

* The index rose 0.1 percent to 7,298 points. (Editing by Andrew Torchia)

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