Saudi advertising major in $270m pursuit of rival

Al Arabia

• Al Arabia working to buy Faden Media
• Six-month deadline to complete deal
• Takeover will add to outdoor ad market share

The Saudi advertising giant Arabian Contracting Services is pursuing the acquisition of its Riyadh-based rival Faden Media, in a deal worth more than SAR1 billion ($270 million). 

The company, also known as Al Arabia, said in a filing to the Saudi Stock Exchange that it is now working to complete the takeover within six months, the statutory timeframe laid down by the General Authority for Competition.

Al Arabia will acquire all shares of Faden Media, which creates digital advertising on buildings and retail stores across the kingdom.

• Middle East to be world’s fastest-growing ad market
• UAE’s Multiply plans IPO after $61m ad agency deal
• Mena targets US as outbound M&A deals jump 53%

In a statement, Al Arabia said: “This deal represents an extension of the strategy of entering profitable alliances and partnerships locally and regionally, with the aim of advancing the company’s position.”

It said that the deal will allow it to acquire a larger share of the outdoor advertising market, which is forecast to hit $980 million in the Middle East this year.

Saudi Arabia is on target to become a $2 billion advertising market this year, the biggest in the Middle East.

The Middle East’s advertising market is expected to be the world’s fastest growing over the next two years, driven by Saudi Arabia’s continuing transformation.

The regional market, worth $5.9 billion last year, is forecast to grow 10 percent in 2023 and a further 6.2 percent in 2024, when its value will reach $6.9 billion, new figures from the marketing consultancy Warc Media say.

Faden Media, headquartered in Riyadh, was set up by Prince Abdulaziz bin Mashhor bin Mosaad bin Abdulaziz Al Saud in 2006 with capital of SR25 million. 

Al Arabia, which is also based in Riyadh, posted sales of SAR294 million in the second quarter of 2023, up from SAR264 million in Q1, while net profit rose to SAR85 million from SAR63 million.

Last week it signed a 10-year contract with Riyadh Airports Company for the construction and operation of more than 500 advertising billboards at King Khalid International Airport. 

On Tuesday, when the acquisition deal was announced, shares in Al Arabia closed nearly 5 percent lower. The company has a market capitalisation of SAR10 billion, 

According to EY, entities in the Middle East and North Africa were involved in 318 new merger and acquisition deals in the first six months of 2023. This was down 14 percent year on year although the combined sales value fell only 0.4 percent to just under $44 billion.