Saudi Arabia-listed Dur Hospitality Company and Taiba Investment Company are entering into preliminary discussions to combine their businesses, potentially forming a company with a market value of about $2.4 billion in the Kingdom’s real estate, hospitality and investment industry.
Taiba, which has a market capitalization of $1.5 billion, operates as an investment company in sectors ranging from real estate and tourism. While, Dur, valued at $923 million, is mainly focused on operating resorts, housing compounds, and restaurants in Saudi Arabia. Assilah Investment is the top shareholder in both companies.
Tourism is a key focus of Saudi Arabia’s plans to diversify its economy. The kingdom’s strategy includes the Red Sea Development, which will oversee a luxury tourism zone equivalent in size to Belgium, an entertainment hub near the capital, and a new city in the northwest called Neom that’s expected to cost $500 billion to build.
Taiba and Dur stated, “these discussions do not mean necessarily that a merger will take place between the two parties.” The sovereign wealth fund of Saudi Arabia, the Public Investment Fund (PIF) holds stakes in both companies and is part of a push to get firms to combine, creating bigger and more efficient entities.
In 2020, PIF was involved in the merger of National Commercial Bank and Samba Financial Group, the biggest banking takeover of 2020. And earlier this year it consolidated all its stakes in three food companies, Almarai, National Agricultural Development and Saudi Fisheries, into a wholly-owned unit as part of efforts to boost food security.
PIF, as the fund is known, appointed two deputy governors earlier this month as it embarks on a plan to grow its assets under management to $1.1 trillion by 2025 from $430 billion, while also investing $40 billion a year into the domestic economy.