Saudi International Petrochemical Co. (Sipchem) and Sahara Petrochemical Co. have entered into a legally binding agreement governing the terms and conditions for implementing a business merger of equals, the companies said in separate bourse statements.
Sipchem will be making a recommended offer to acquire all the issued shares in Sahara in exchange for the issuance of new shares in accordance with the applicable rules and regulations of the Capital Market Authority (CMA) and Companies Regulations.
A total of 366.67 million new Sipchem shares will be issued for Sahara shareholders at an exchange ratio of about 0.84 new Sipchem shares for each share of Sahara.
Sipchem’s capital is going to increase to 733.33 million shares after the conclusion of the deal, whereby Sahara shareholders will own 366.67 shares of the new company representing 50 percent of total capital.
Ahmed Alohali, the current CEO of Sipchem, will hold the same position at the new combined group, while Saheh Bahamdan, Sahara’s current chief executive, will be the operations manager.
Both parties have agreed to withhold cash dividend from the date of the implementation until the completion of the deal unless the distribution policy matches the ones approved at the time. In that case, dividend distributed for the second half of 2018 shouldn’t exceed SAR 240 million for each company’s shareholders.
The distributing company will also have to meet the statutory reserve requirements and any other required reserves.
Both parties will negotiate in good faith, distributing dividend to their shareholders if the deal is not concluded by June 30, 2018, to avoid any changes to the swap agreement.
Upon completion of the transaction, Sahara shares will be delisted from Tadawul and will become a wholly-owned subsidiary of Sipchem, the statement added.
On Oct. 3, Sipchem and Sahara signed a non-binding memorandum of understanding (MoU) to carry out a merger, whereby the former will fully acquire the latter via share swap, Argaam previously reported.
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Transaction Summary |
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New company name |
Sahara International Petrochemical Co. (Sipchem) |
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Shares SWAP factor |
0.8356 shares of new Sipchem group : every 1 share of Sahara |
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Number of Sipchem’s shares after the transaction |
733.33 mln |
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Number of shares to be held by Sahara investors |
366.66 mln shares (50% of capital) |
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Number of shares to be held by Shichem investors |
366.66 mln shares (50% of capital) |
For further details on the deal, please refer to the attachment
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