Logos of Gulf Union AlAhlia Cooperative Insurance Co. and Al Sagr Cooperative Insurance Co.
On March 22, Gulf Union AlAhlia Cooperative Insurance Co. signed in March 2023 a binding merger agreement with Al Sagr Cooperative Insurance Co., outlining the terms and conditions under which Al Sagr's assets and liabilities will be transferred to Gulf Union AlAhlia via a share swap deal.
A total of 16.12 million new ordinary shares, fully paid and accounting for 35.13% of Gulf Union AlAhlia's capital, will be issued to Al Sagr's shareholders in return for merging the two insurance firms at SAR 10 a share. A total of 1.15 shares in Gulf Union AlAhlia will be issued against each issued share in Al Sagr.
In July, both insurers obtained the approval of the Capital Market Authority (CMA) and the Saudi Central Bank (SAMA) on the potential merger deal. However, they still need the approval of the extraordinary general meetings (EGMs) of both companies.
Shareholders of Gulf Union Alahlia and Al Sagr will vote on the merger during the EGMs scheduled for Aug. 30, according to Argaam.
In addition, shareholders of both insurers can e-vote on the agenda items as of Sunday, Aug. 27, 2023.
The new entity’s capital will reach SAR 620.19 million, making it the Kingdom’s seventh-largest insurance firm in terms of capital.
Gulf Union AlAhlia’s H1 2023 profit before tax increased remarkably to SAR 59.67 million, and accordingly, the company’s accumulated losses dropped to 13.96% of capital.
Al Sagr also reported a profit before tax of SAR 20.19 million for H1 2023.
Both insurers confirmed their commitment to achieving stability and growth across all operations, in addition to increasing shareholders' equity.
The potential merger will likely boost the new entity’s efficiency, which will reflect positively on shareholders, clients, and employees.
For shareholders, the merger will increase and improve assets by providing sufficient capital capable of achieving the objectives of the entity. It will also raise the target investment funds, resulting in higher investment returns.
Moreover, the merger will boost growth in earnings per share for the company's shareholders, improve the company's capital efficiency, enhance the solvency margin of the new entity, and achieve financial integration between the two companies.
For customers, the merger will help improve customer service, achieve better insurance product pricing, provide opportunities to enter new markets, and strengthen the new entity's credit position.
Furthermore, the merger will increase the new entity's competitiveness, achieve integration between technical systems to provide an exceptional insurance experience for customers, and expand the presence of the new entity.
The merger will also raise the competence of staff by exchanging experiences between the two companies, empowering national competencies, and promoting distinguished career opportunities.
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