KUALA LUMPUR (Aug 27): Dialog Group Bhd (KL:DIALOG) is selling its entire stake in its Saudi Arabian joint venture (JV), Dialog Jubail Supply Base Company Ltd (DJSB), for 47.5 million Saudi riyals (about RM55 million) to its JV partner.

The group, through its indirect subsidiary Dialog (Labuan) Ltd (DLL) has entered into an agreement with Sedres Trading & Maritime Services Co Ltd to sell the 60% stake in DJSB. Sedres currently holds the remaining 40% stake in DJSB, which is primarily engaged in providing logistics services for a supply base and the trading of base oil in Saudi Arabia.

The transaction comprises a sale consideration of three million Saudi riyals (around RM3.5 million) and a dividend of 44.5 million Saudi riyals (approximately RM51.5 million) to be received before the completion of the stake sale.

The stake sale will result in a gain for Dialog of 900,000 Saudi riyals (about RM1 million). Proceeds from the sale will be used for working capital.

Dialog said stake sale is due to the shifting business environment at the Jubail Port, with demand for DJSB’s heavy lifting services expected to decline amid a growing preference for conventional logistics services. In light of this trend and Sedres’ interest in acquiring DJSB as a locally owned entity in Saudi Arabia, the group sees an opportune moment to divest its stake.

DLL’s original investment in DJSB was 1.2 million Saudi riyals (about RM1.4 million), made in 2011.

The disposal does not require approvals from the authorities or Dialog's shareholders.

Dialog shares closed 10 sen or 4.13% higher at RM2.52 on Tuesday, giving it a market capitalisation of RM14.23 billion.