Logos of Qassim Cement Co. and Hail Cement Co.
Qassim Cement Co. (QCC) signed, on Dec. 21, a binding agreement with Hail Cement Co. (HCC) to buy the latter through a share swap, both companies said in separate statements to Tadawul.
The deal is accordance with Article 26 of the merger and acquisition regulations and in line with the rules on the offer of securities and continuing obligations issued by the Capital Market Authority (CMA).
QCC’s market value on Dec. 21, 2023 (the last trading day before this disclosure) stood at SAR 5.69 billion.
Upon completing the deal, QCC’s current shareholders will own 81.4% of the company after a capital increase, while HCC shareholders will own 18.6% of QCC after the capital hike.
QCC will obtain regulatory approvals related to publishing a circular to shareholders with all details relating to the transaction, while HCC will publish a board circular to shareholders.
The implementation agreement will expire after one year from the signing date, if terms and conditions are not fulfilled or a written agreement exempts any of the parties from these terms.
The agreement also expires if one party sends a written notice to the other terminating the agreement or if both parties agree in writing to terminate the agreement.
QCC noted that the deal is subject to a number of conditions, including regulatory approvals from the CMA and Tadawul.
The deal is also subject to submitting related notices to Edaa, along with obtaining approvals from the General Authority for Competition (GAC), the Ministry of Commerce and shareholders of HCC and QCC.
QCC also noted a material negative event should not happen; the guarantees offered by both companies should not be breached; a decision or a decree by any regulatory authority that may render the deal illegal, should not be issued; and obtaining the approval of a number of parties contracting with both companies; and there should be no breach of any warranties provided by either QCC and HCC.
HCC said that QCC’s disclosure on the implementation agreement does not imply a declaration of firmed intentions to submit an offer. The announcement pertaining to firm intention will be made after requisite conditions for it are fulfilled.
The transaction includes a related party. QCC established a private investment fund, managed by a capital market institution, to invest in securities and shares. QCC owns all the units in this fund, and the fund owns 2.31 million shares, or 2.36% of HCC share capital prior to the transaction.
This fund is a related party, in accordance with the Merger and Acquisition Regulations.
|
Transaction Details |
|
|
Item |
Details |
|
Transaction |
QCC to acquire HCC shares |
|
Compensation |
Issuing new shares for HCC shareholders |
|
Exchange Ratio |
HCC shareholders will receive 0.21 new shares in QCC for every share owned in HCC |
|
New Entity |
Qassim Cement |
|
Hail Cement Post Merger |
Will be delisted. Fully owned by QCC |
|
Qassim Cement Pre-Merger Capital |
SAR 900 mln |
|
Qassim Cement Post-Merger Capital |
SAR 1.10 billion |
|
Capital Increase Percentage |
22.8% |
|
Qassim Cement Stock Price based on Exchange Ratio |
SAR 63.20 |
|
Hail Cement Stock Price for Merger Purpose |
SAR 13.27 |
|
Total Value of Hail Cement Shares for Deal Purposes |
SAR 1.29 bln |
|
Qassim Cement Shareholders’ Stake in New Entity |
81.4% |
|
Hail Cement Shareholders’ Stake in New Entity |
18.6% |
QCC signed on Sept. 25, 2022, a non-binding memorandum of understanding (MoU) with HCC to commence discussions on a share-swap deal, under which Qassim Cement will fully acquire Hail Cement, Argaam reported.
To review the agreement details, click on the below attachment:
Comments
{{DisplayName}}
{{ElapsedTime}}