Logos of Qassim Cement Co. and Hail Cement Co.
Qassim Cement Co. (QCC) signed today, Sept. 25, a non-binding memorandum of understanding (MoU) with Hail Cement Co. (HCC) to commence discussions on a share-swap deal, under which Qassim Cement will fully acquire Hail Cement.
In a statement to Tadawul, Qassim Cement said both parties will proceed with the due diligence in relation to the proposed transaction.
With the completion of the relevant financial valuation and in light of the due diligence, Qassim Cement and Hail Cement will proceed with talks on a non-binding swap ratio, where Hail Cement’s shareholders will receive 0.1933 newly issued share in Qassim Cement for every share they own in Hail Cement.
If the deal completes based on the exchange ratio, the total consideration to be paid by Qassim Cement to Hail Cement’s shareholders will be approximately 18.92 million newly issued shares in Qassim Cement.
Based on Qassim Cement’s closing price on Sept. 21 of SAR 75 a share, the deal, if completed based on the exchange ratio, would value each Hail Cement share at SAR 14.5, which represents a premium of 18.7% to Hail Cement share price as of Sept. 21, 2022.
According to the statement, no financial advisor was appointed at this stage and any developments about the appointment of a financial advisor will be announced later.
Pursuant to the non-binding MoU, Qassim Cement and Hail Cement agreed that, in case of proceeding with the transaction, it will be implemented through a share exchange offer made by Qassim Cement (the offeror) to Hail Cement (the offeree) for the full acquisition of Hail Cement.
Qassim Cement will issue new shares for Hail Cement shareholders as per Article 26 of the merger and acquisition regulations. Accordingly, Hail Cement will be delisted and will become a wholly owned subsidiary of Qassim Cement.
After completing the financial valuation, Hail Cement shareholders will receive 0.1933 newly issued shares in Qassim Cement for every share they own in Hail Cement. The final swap ratio will be set in the definitive agreements of the transaction.
The MoU does not constitute a binding agreement to implement the proposed transaction, as the implementation of the transaction is subject to reaching a final definitive agreement that determines the relevant terms and conditions (T&Cs).
The T&Cs will include obtaining all the required regulatory approvals and the approval of the respective extraordinary general meeting of Qassim Cement and Hail Cement on the transaction and its related matters.
The proposed acquisition may possibly involve related parties, and some board members may have an interest in the transaction. These details will be announced later, the statement noted.
The parties intend to conclude the due diligence and sign the relevant definitive agreements, if they agree on the final terms, as soon as practicable.
Qassim Cement will announce any material developments about the transaction in accordance with the applicable laws and regulations.
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Transaction Details |
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Item |
Details |
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Transaction |
Qassim Cement’s acquisition of Hail Cement’s issued shares |
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Exchange Ratio |
Hail Cement’s shareholders will receive 0.1933 newly-issued shares in Qassim Cement for every share they own in Hail Cement |
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Consideration Payable by QCC |
Approximately 18.92 million newly issued shares in Qassim Cement |
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Stock Price for Purpose of Acquisition |
Based on Qassim Cement’s closing price of SAR 75 a share on Sept. 21, the deal, if completed based on the exchange ratio, would value each HCC share at SAR 14.5 |
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Qassim Cement Capital |
SAR 900 mln (90 mln shares) |
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Hail Cement Capital |
SAR 979 mln (97.9 mln shares) |
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