CMA approves MEDGULF capital hike for merger with Buruj

Logos of The Mediterranean and Gulf Insurance and Reinsurance Co. (MEDGULF) and Buruj Cooperative Insurance Co.

The Capital Market Authority (CMA) approved The Mediterranean and Gulf Insurance and Reinsurance Co.'s (MEDGULF) request to increase its capital from SAR 1.05 billion to SAR 1.38 billion, through issuing 33.16 million ordinary shares.

The capital hike is coming for a potential merger with Buruj Cooperative Insurance Co., under which the latter's assets and liabilities would be transferred to MEDGULF through a share swap transaction.

In a statement, the CMA said a shareholders circular will be published within sufficient time before the deciding extraordinary general meeting (EGM) of MEDGULF.

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The CMA resolution included an approval of the proposed offer timetable and the publication of the offer document by MEDGULF to Buruj shareholders to merge the two entities through a share swap.

The offer document of MEDGULF will be published to Buruj shareholders for the merger process within sufficient time before the EGM of Buruj.

The offer document should include all relevant information that shareholders need to know before making an informed decision when voting on the offer, including the offer information and risk factors.

If MEDGULF shareholders approve the capital increase, and Buruj shareholders accept the offer in their EGMs, the new shares will be issued to Buruj shareholders who are registered with the Securities Depository Center Co. (Edaa).

In addition, Buruj will be delisted from the Saudi Exchange (Tadawul) after MEDGULF shareholders approve the capital top-up and Buruj shareholders accept the offer in their EGMs.

A voting decision without reading the shareholder circular and the offer document carefully may involve high risks. Therefore, shareholders should carefully read the circular and the offer document to reach a proper voting decision.

If the circular and offer document prove difficult to understand, it is recommended to consult with an authorized financial advisor.

The CMA's approval should never be considered as an endorsement of the merger's feasibility. It merely means that the legal requirements as per the Capital Market Law and its Implementing Regulations have been met.

According to data compiled by Argaam, MEDGULF and Buruj signed a non-binding memorandum of understanding (MoU) in July 2024 to evaluate the feasibility of merging the two companies.

In January, the two companies obtained a no-objection clearance from the General Authority for Competition regarding the economic concentration resulting from the proposed merger.

In July, the two companies signed a binding merger agreement under which Buruj would be merged into MEDGULF, transferring all of its rights, liabilities, assets, and contracts to MEDGULF. Accordingly, the latter would issue 33.16 million ordinary shares to Buruj’s shareholders.