Gulf Union Cooperative Insurance Co. and Al Ahlia for Cooperative Insurance Co. (Al-Ahlia) signed a non-binding memorandum of understanding (MoU) to evaluate their potential merger, according to a bourse filing on Wednesday.
Both insurers will conduct technical, financial, legal and actuarial due diligence and engage in non-binding discussions on the terms and conditions of the potential merger.
The merger, if completed, will be through a share swap, whereby Al-Ahlia will issue new shares to its shareholders in exchange for all issued shares in Al-Ahlia.
Moreover, both firms initially agreed on using the book value of equity methodology, after any mutually agreed due diligence adjustments.
The statement added that the swap ratio will be calculated using the respective reported book value per share of Al-Ahlia in the latest financial statements published on or before the date of signing of the merger agreement.
Gulf Union and Al-Ahlia appointed Saudi Kuwaiti Finance House (SKFH) and Aljazira Capital as financial advisor for the proposed merger.
The Saudi-based firm noted that the MoU would expire upon signing the merger deal or after 9 months from the date of signing the MoU, whichever is earlier. The deal could be also extended by mutual consent.
Both parties can also agree to terminate the MoU by a written notice at any time.
The proposed merger is subject to the completion of the required due diligence to the parties agreement on final terms and conditions. It is also subject to the approval of the competent authorities and the general assemblies
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