Logo of Arabian Shield and Alahli Takaful
The Capital Market Authority (CMA) approved, on Nov. 10, Arabian Shield Cooperative Insurance Co.’s request to increase its capital from SAR 400 million to SAR 638.52 million, by issuing 23.852 million ordinary shares to merge with Alahli Takaful Co. (ATC) , and transfer ATC’s assets and liabilities to Arabian Shield through a securities exchange offer.
The authority said in a statement that Arabian Shield’s capital increase shareholder circular will be published within sufficient time before the extraordinary general assembly meeting (EGM).
The 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 Arabian Shield to ATC’ shareholders to merge Arabian Shield into ATC through a securities exchange offer.
The offer document of Arabian Shield will be published to ATC’ shareholders to merge ATC into Arabian Shield in advance before the EGM of ATC.
The offer document must include all relevant information that shareholders need to know before making an informed decision when voting on the offer, including the offer information and risk factors.
If Arabian Shield’s shareholders approve the capital increase, and ATC’ shareholders accept the offer in their EGM, the new shares will be issued to ATC’ shareholders who are registered in the Securities Depository Center Co. (Edaa). Shares of ATC will be delisted from the Saudi Exchange (Tadawul) when 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, shareholders should carefully read the 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.
In July, ATC and Arabian Shield signed a binding memorandum of understanding (MoU) for merger, according to data available with Argaam.
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Merger Details |
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Method of Merger |
By merging ATC with Arabian Shield and transferring all of ATC’s assets and liabilities to Arabian Shield. |
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Merger Value |
If the merger has been approved by all relevant government authorities and EGMs of both companies, Arabian Shield will increase its share capital from SAR 400 mln to SAR 638.52 mln by issuing 23.85 mln new ordinary shares. |
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Nominal Value |
SAR 10 per share |
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Swap Ratio |
Issuance of 1.43 shares of Arabian Shield against one share in ATC |
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Capital of Merged Entity |
SAR 638.52 mln |
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Ownership of Arabian Shield Shareholders Upon Merger Completion |
62.64% |
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Ownership of ATC Shareholders Upon Merger Completion |
37.36% |
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