The deal is subject to regulatory approvals, but if finalised, Cargill will own 20% of the JV, while Arasco will take an 80% stake and management control.
Cargill executive vice president Frank van Lierde said that the Middle East region was the highest growth area for the food and drink industry in the world.
“The rapidly changing demographics in the region and the growth of consumer choice means that this joint venture will be well placed to help our customers meet this rapidly developing market,” he said.
“By partnering with Arasco and combining the strengths of both our companies, this joint venture will not only help us create enhanced solutions for our customers but most importantly local solutions.”
The companies have agreed that the JV would acquire Arasco’s corn milling plant in Al Kharj with the aim of tripling production to produce starch-based products primarily for countries in the Gulf region. Cargill said that the increased production would help meet growing demand across the region from confectionery, juice, bakery and catering companies.
Adding HFCS production
In addition, the companies said that they would more than double capacities for glucose and starch production and begin production of high fructose corn syrup (HFCS) “to serve the growing food and beverage industry in the Kingdom of Saudi Arabia.”
Arasco CEO Dr Abdulmalik Alhusseini welcomed the JV as an opportunity to expand its range of ingredients.
“Through this joint venture, we can expand our facilities more quickly and launch new products, such as HFCS to the Kingdom of Saudi Arabia,” he said.
As Cargill’s first move into Saudi Arabia, the company said the JV could help it discover further opportunities for growth in the region, in response to consumer demand.