Agthia announced today that it had signed a share purchase agreement to fully acquire Delta Water Factory, a KSA-based water business (in Jeddah). Deal details including purchase price are not yet disclosed, with the deal expected to close in 1Q17 after regulatory approvals and other closing conditions. The acquisition comes in line with the company’s strategy and previously-announced plans to buy a beverage company in the GCC before year-end. Delta’s water business has been present in Saudi Arabia for over three decades and is growing and cash flow positive as per the company’s disclosure. Delta has three brands: i) ‘Al Ain’ (coincidentally the same name as Agthia’s flagship brand in the UAE) – its best seller sold in PET bottles and cups, as well as dispenser bottles (150ml to 6-gallon); ii) “Delta Water” – a premium product sold in 5- and 6-gallons; and iii) ‘Bambini’ – the first water in ME specially designed for baby food preparation (sold in PET bottles; 330ml-2 liters). The company also has a bulk water activity targeting large industrial processing companies.   We view the deal positively as it allows the company to expand its successful water business and tap into the fast-growing Saudi water market. We await more details on the deal to assess how value-accretive it will be. (Company disclosure, Hatem Alaa, Nada Amin)   Agthia Group (AD): AED6.24 as of 13 November 2016, Rating: Neutral, FV: AED7.15 per share, MCap: USD1,020mn, AGTHIA UH / AGTH.AD