United Mining says takeover bid confirmed by Knauf International

Logo of United Mining Industries Co.

Nomu-listed United Mining Industries Co. (UMI) announced the firm intention of Knauf International GmbH (Knauf) to make a tender offer for the company’s takeover, in accordance with the terms, conditions and procedures, to be disclosed in the offer document upon its publication.

According to a Tadawul statement, Knauf (which currently owns 63.2% of the company's shares) is offering to acquire up to 5.15 million shares in the company, representing all shares not owned by Knauf, for a consideration of SAR 57 per share.

Shares to be tendered must be freely negotiable and free from any lien, pledge, charge or other security interest or restriction of any kind whatsoever restricting the free transfer of their ownership. Knauf reserves the right to reject, at its sole discretion, any shares tendered which do not meet this requirement, said the company.

If the Tender Offer is not accepted by all UMI shareholders in respect of all of their shares, Knauf will acquire only those shares for which valid acceptances are received, and any non-accepting minority shareholders will retain their shares in UMI, it added.

Following the completion of the Tender Offer, if Knauf’s ownership in UMI reaches the threshold of 90%, Knauf could exercise its right to squeeze-out the remaining UMI minority shareholders, by making a mandatory offer with the approval of the CMA to force UMI's minority shareholders to sell their shares to Knauf, which would result in the transfer of their shares to Knauf for cash consideration.

Following the Completion of the Tender Offer, Knauf intends, as a substantial shareholder of UMI and subject to obtaining the applicable regulatory approvals and satisfying the relevant requirements, to take the necessary steps for the delisting of UMI from the Saudi Exchange (Tadawul).

Upon delisting, there will no longer be a public market for trading UMI's shares. Shareholders who do not accept the Tender Offer (if any) may find it difficult to dispose of their shares and may hold illiquid shares following the Completion of the Tender Offer.

The current board of UMI will continue to act and exercise all of its powers for the current term ending on May 29, 2027, unless any changes are made to the board composition (for any reason) in compliance with the relevant regulatory conditions and subject to the approval of the shareholders of UMI (where required).

United Mining also noted that the Tender Offer constitutes a related party transaction, given the fact that Knauf is a substantial shareholder in UMI with an ownership percentage of 63.2% of the total share capital.  As such, the submission of the Tender Offer will be subject to satisfying the requirements of the Merger and Acquisitions Regulations to obtain the approval of UMI's independent and disinterested shareholders (i.e., excluding Knauf).  This requirement is a pre-requisite for launching the Tender Offer and making it available for acceptance by UMI's shareholders.

Additionally, it should also be noted that there are members of UMI's board of directors who have an interest in the Tender Offer, namely:

 (1) Dr. Markus Haaf (in his capacity as Knauf's Inhouse Tax Consultant);

(2) Paul Christopher Button (in his capacity as Knauf's CEO in the Gulf Cooperation Council); and

(3) Serge Nicolas Bekhaazi (in his capacity as Knauf's CEO in Middle East, Turkey, Africa).

These board members have all declared their interest in the Tender Offer to UMI's board of directors and subsequently will abstain from voting on any resolution regarding the launch of the Tender Offer.

Knauf has appointed Lazard Saudi Arabia as its financial advisor in relation to the Tender Offer Transaction, and appointed Fahad Abuhimed, Majid Alsheikh, Mansoor Alhagbani and Clifford Chance Law Firm as its legal advisor in relation to the Tender Offer Transaction.

Knauf will make further announcements as and when material developments occur in relation to the Tender Offer in accordance with the applicable laws and regulations.

According to Argaam’s data, United Mining received a notification in May from Knauf International GmbH regarding the completion of a private transaction to purchase all shares held by the company's major shareholders, totaling approximately 8.9 million ordinary shares, representing 63.2% of the company's total share capital, for a value of SAR 504.5 million.

United Mining stock closed Monday's session in Nomu 1.5% higher at SR 52.80.

The company, which specializes in the manufacture of gypsum boards, gypsum powder, cement boards, and suspended ceilings, was listed on Nomu in October 2023.

Knauf International GmbH (as the offeror), is a limited liability company incorporated under the laws of the Federal Republic of Germany. Knauf is solely controlled by Gebr. Knauf KG, a limited partnership incorporated under German law.

Knauf is a part of Knauf Group, an international building materials manufacturer founded in 1932, which is a family-owned company, and today is the world's leading producer of gypsum-based construction materials and systems, energy-efficient insulation, and system solutions for ceilings.