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United Cooperative Assurance Co. announces signing a Memorandum of Understanding with Saudi Enaya Cooperative Insurance Co to evaluate a potential merger between the two companies
| Element List | Explanation |
|---|---|
| Introduction | The United Cooperative Assurance Company announces the signing of a non-binding Memorandum of Understanding (the “MOU”) with the Saudi Enaya Cooperative Insurance Co on Monday 11/05/1444H (corresponding to 05/12/2022) to evaluate a potential merger between the two companies. Both companies 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 two companies have agreed that in the event the proposed merger occurs, it will be implemented by way of share swap where, after the proposed merger is completed, the United Cooperative Assurance Company will issue new shares to the Saudi Enaya Cooperative Insurance Co shareholders in exchange for all issued shares of the Saudi Enaya Cooperative Insurance Co. The two companies have initially agreed that the methodology used for valuation will be based on equity book value (after any mutually agreed due diligence adjustments) and that the swap ratio between the United Cooperative Assurance Co and the shareholders of the Saudi Enaya Cooperative Insurance Co shall be calculated using the respective adjusted equity book value per share as at a mutually agreed Cut-Off Date. The United Cooperative Assurance Co has appointed AlInma Capital as its financial advisor for the proposed merger. The financial advisors and other advisors involved in the due diligence and verification process are expected to evaluate the financial strength rating, performance record, product offerings, potential business opportunities, potential merger incentives, if any, compliance costs on account of existing contracts on account of business operations, employee retention, company location, and any other information, and any relevant adjustments that may have an effect on the carrying amount. |
| Memorandum Signing Date | 2022-12-05 Corresponding to 1444-05-11 |
| Counterparty | Saudi Enaya Cooperative Insurance Co |
| Memorandum Subject | Evaluation of a potential merger between the United Cooperative Assurance Company and the Saudi Enaya Cooperative Insurance Co |
| Memorandum Duration | The memorandum of understanding shall expire upon the signing of the merger agreement by the two companies or after a period of 180 days from the date of the memorandum of understanding, whichever is earlier. The Memorandum of Understanding can be extended with the approval of the two joint companies. The two companies may also jointly agree to terminate the Memorandum of Understanding by giving written notice to this content at any time. |
| Related Parties | None. |
| Financial Impact | The United Cooperative Assurance Co will continue to announce any material developments regarding the proposed merger in accordance with the relevant laws and regulations. Meanwhile, the United Cooperative Assurance Co intends to continue to conduct business as usual until the completion of the proposed merger. |
| Additional Information | The proposed merger is subject to the completion of due diligence to the parties’ satisfaction, agreement on final terms and conditions of the merger agreement, and the approval of the competent authorities and the general assemblies of The United Cooperative Assurance Co and the Saudi Enaya Cooperative Insurance Co. The entry into the MoU does not mean that the proposed merger will be agreed between the two companies. Further announcements will be made when appropriate. |
The Capital Market Authority and Saudi Exchange take no responsibility for the contents of this disclosure, make no representations as to its accuracy or completeness, and expressly disclaim any liability whatsoever for any loss arising from, or incurred in reliance upon, any part of this disclosure, and the issuer accepts full responsibility for the accuracy of the information contained in it and confirms, having made all reasonable enquiries, that to the best of their knowledge and belief, there are no other facts or information the omission of which would make the disclosure misleading, incomplete or inaccurate.
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