Gulf Union Alahlia, Gulf General sign non-binding merger MoU

Logo of Gulf Union Al Ahlia Cooperative Insurance Co.

Gulf General Cooperative Insurance Co. signed today, Aug. 7, a non-binding memorandum of understanding (MoU) with Gulf Union Al Ahlia Cooperative Insurance Co. to evaluate a potential merger, the companies said in two separate statements to Tadawul.

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Both companies will conduct operational, technical, financial, legal, and actuarial due diligence and engage in non-binding discussions on the terms and conditions of the potential merger.

The two parties agreed that, in the event of signing the binding merger agreement, securing the regulators’ and shareholders’ general assembly approvals, the potential merger will be implemented through a share swap deal. Gulf Union Alahlia will issue new shares to Gulf General shareholders in exchange for all the latter's issued shares after the proposed merger is completed.

The share-swap exchange ratio will be determined after concluding (to the satisfaction of each party) all necessary due diligence by Gulf Union Alahlia and Gulf General.

The adjusted net equity book values of both parties as reported in their most recent financial statements published on or before the date of signing of the merger agreement (after the parties agree on necessary adjustments resulting from the due diligence process mentioned above) will be the basis for agreeing on the exchange ratio.

Each company will appoint a financial advisor for the proposed merger later.

The MoU would expire upon signing the merger or after 12 months from the MoU, whichever is earlier.

The MoU can be extended by mutual consent of the parties, with each party having the absolute right to terminate it by providing written notice to the other party at any time for any reason without liability.

Both companies will continue to announce any material developments regarding the proposed merger in accordance with the relevant laws and regulations.

The proposed merger is subject to the completion of due diligence to the parties’ satisfaction, consensus on the final terms and conditions of the merger agreement, as well as the approval of the competent authorities and the general assemblies of both companies.

Signing the MoU does not mean that the proposed merger will be approved by the two companies, and further announcements will be made when appropriate, according to the statement.