Logos of Arabian Shield Cooperative Insurance Co. and Alinma Tokio Marine Co.
The Capital Market Authority (CMA) approved the application received from Arabian Shield Cooperative Insurance Co. to increase its capital from SAR 638.52 million to SAR 798.15 million by issuing 15.96 million ordinary shares, the regulator said in a statement today, Sept. 18.
The capital hike is aimed at merging Alinma Tokio Marine Co. into Arabian Shield Cooperative Insurance Co. and transferring all of the former’s assets and liabilities to the latter through a share swap.
Arabian Shield’s capital top-up shareholders’ circular, which must cover all the relevant information that the insurer’s shareholders need to know before making an informed decision when voting on the capital increase for the abovementioned purpose, shall be published within sufficient time before the planned extraordinary general meeting (EGM), the CMA said.
The CMA's decision included the approval of the proposed transaction timetable and offer document, published by Arabian Shield and addressed to Alinma Tokio Marine’s shareholders for a merger through a share swap.
The offer document shall be released within sufficient time before the EGM of Alinma Tokio Marine. It must include all the relevant information that the latter’s shareholders need to know before making an informed decision when voting on the move, including the offer details and risk factors, according to the market regulator.
If Arabian Shield’s shareholders decide on the capital increase and Alinma Tokio Marine’s shareholders approve the merger offer in their EGMs, the new shares will be issued for shares held by Alinma Tokio Marine’s shareholders of record and those registered with the Securities Depository Center Co. (Edaa). In parallel, shares of Alinma Tokio Marine will be delisted from the Saudi Exchange after the EGMs’ decisions take effect.
A voting decision without carefully reading and reviewing the shareholders’ circular and the offer document may involve high risks. Shareholders in doubt should consult an independent financial advisor licensed by CMA before voting on any decision related to the merger deal, according to the market regulator.
The CMA said its approval should never be considered as an endorsement of the merger's feasibility. It merely means that the legal requirements as per the Capital Market Law and its Executive Regulations, have been met.
Arabian Shield and Alinma Tokio Marine obtained, on Sept. 11, the approval of the Saudi Central Bank (SAMA) on their merger, according to Argaam's data.
In June, the two insurers signed a binding merger agreement through a share swap. They agreed that Arabian Shield will issue 0.53 ordinary share for every share issued in Alinma Tokio Marine.
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Merger Details |
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Method of Merger |
Alnima Tokio Marine will merge into Arabian Shield, and all its assets and liabilities will transfer to the latter |
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Merger Value |
If the merger is approved by the regulatory authorities, and shareholders of both companies and upon the expiry of creditors' objection period, Arabian Shield will increase its capital to SAR 798.15 million from SAR 638.52 million by issuing 15.96 million new ordinary shares |
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Nominal Value |
SAR 10 per share |
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Swap Ratio |
Issuance of 0.53 share in Arabian Shield for every share in Alinma Tokio Marine |
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Capital of New Entity |
SAR 798.15 mln |
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Arabian Shield’s Post-Merger Ownership |
80% |
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Alinma Tokio Marine’s Post-Merger Ownership |
20% |
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