National Company for Learning & Education's building
National Company for Learning & Education (NCLE) signed today, July 13, a final agreement with shareholders of Al Salam Education and Training Co., the owner of Al-Khobar-based Al-Salam Private Schools, to buy their entire shares in Al Salam Education for SAR 72 million, according to a filing to Tadawul.
NCLE conducted the required due diligence and valuation through its external advisors. The valuation was done using different methods, such as discounted cash flows (DCF), P/E and EBITDA Multiples.
The agreement includes several warranties and representations by the sellers regarding the commercial aspects such as the accuracy of information in Al-Salam Education’s accounts and financial statements, as well as the validity of assets ownership. This is in addition to other warranties related to the company’s liabilities and its employees as well as the indemnification of NCLE for any unrecorded liabilities for the period prior to the deal closure date.
The agreement is also subject to several conditions precedent that must be fulfilled by the sellers within 150 days from the date of signing the agreement, including obtaining the necessary regulatory approvals, the company stated.
NCLE also indicated that the deal entails the sellers' obligation to maintain the company’s normal commercial operations and sustain all contractual relationships with its suppliers and customers as well as its responsibility to its employees and the compliance with all Saudi regulations. The agreement also sets restrictions for the sellers to carrying out any task specified under the agreement and its annexes until the closing date prior unless the sellers receive a prior written consent from the buyer.
The agreed purchase price will be paid in cash to the sellers over two installments. The first payment of SAR 5 million will made upon agreement signing, while the remaining SAR 67 million will be paid upon signing of the amended articles of association as per the applicable regulations. The transaction will be funded through NCLE’s internal resources and bank facilities.
Al-Salam Education is a limited liability company whose main activity is the management and operation of private schools for boys and girls (pre-school, primary, intermediate, and secondary education). It owns and operates Al-Salam Private Schools complex, which has approximately 1,500 students in the academic year 2021/2022.
Al-Salam Education’s assets include the land and building of the educational complex, which is characterized by the highest specifications, spanning across a land area of 10,480 square meters, according to the filing.
Al-Salam Education recognized revenues of SAR 28.5 million, SAR 25.1 million, and SAR 22.3 million in its 2019, 2020 and 2021 financial statements, respectively. Additionally, the company recorded a net profit of SAR 2.9 million, SAR 2.4 million in 2019 and 2020, as well as a loss of SAR 1.4 million in 2021.
The transaction is of key importance to NCLE as it recognizes the opportunity to improve Al-Salam Education’s s profit margins. It is also part of the company’s strategy for expansion through acquisitions and purchase of existing high-quality educational complexes across the Kingdom, in order to support the growth and returns that NCLE aims to achieve, the company said.
Generally, NCLEexpects a positive impact as a result of the growth in revenue and net income, which will be reflected on the performance results throughout the fiscal year ending on August 31, 2023, in line with previous financials for the last three years disclosed in this announcement.
The company added that the deal closure is subject to obtaining regulatory approvals, including the General Authority for Competition’s (GAC) approval. It noted that there are no related parties.
In April, NCLE signed a non-binding memorandum of understanding (MoU) with Al Salam Education to purchase the entire shares of Al Salam Education shareholders in return for cash. The MoU was signed with Qitaf Holding Co. and Abdulrahman Saleh Al Rajhi & Partners Co. Ltd.
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