CMA approves Gulf Union’s SAR 229.5 mln capital hike request to merge with Al-Ahlia

The Saudi Capital Market Authority (CMA) approved on Monday Gulf Union Cooperative Insurance Co.’s (Gulf Union) request to increase its capital from SAR 150 million to SAR 229.47 million by issuing 7.95 million ordinary shares to merge Al-Ahlia Insurance Co. (Al-Ahlia) with Gulf Union, and transferring Al-Ahlia’s assets and liabilities to Gulf Union through a securities exchange offer.

The authority said in a statement that Gulf Union’s capital increase shareholder circular will be published within sufficient time before the extraordinary general assembly meeting (EGM).

The CMA added that the shareholder circular must include all relevant information shareholders need to know before making an informed decision when voting on the capital hike for the purpose described, including the increase in capital and risk factors.

The CMA resolution included the approval of the proposed offer timetable, as well as approval of the publication of the offer document by Gulf Union to Al-Ahlia shareholders to merge Al-Ahlia into Gulf Union through a securities exchange offer.

The offer document of Gulf Union will be published to Al-Ahlia shareholders to merge Al-Ahlia Insurance Co. into Gulf Union well in advance before the EGM of Al-Ahlia. The offer document must include all relevant information that the shareholders need to know before making an informed decision when voting on the offer, including the offer information and risk factors.

The CMA added that if Gulf Union shareholders approved the capital increase, and Al-Ahlia shareholders accepted the offer in their EGM, the new shares will be issued to Al-Ahlia shareholders who are registered in the shareholders registry at the Securities Depository Center Company and the shares of Al-Ahlia will be delisted from the Saudi Stock Exchange after the merger decision becomes effective.

A voting decision without reading the shareholders circular and the offer document carefully reviewing its content may involve high risks.

Therefore, the shareholder should carefully read the shareholders circular and the offer document to be able to reach a proper voting decision, the statement said, adding that if the shareholders circular and offer document prove difficult to understand, it is recommended to consult with an authorized financial advisor.

The CMA’s approval should never be considered as an endorsement of the merger’s feasibility. The CMA's approval of the application merely means that the legal requirements as per the Capital Market Law and its Implementing Regulations have been met, the statement added.

According to data available with Argaam, Gulf Union Cooperative Insurance Co. signed, on June 4, a binding merger agreement with Al-Ahlia Insurance Co. to acquire all its shareholders’ issued shares through share swap without any cash payment.