CMA OKs Salama’s capital hike for merger with Saudi Enaya

Salama Cooperative Insurance to raise its capital to SAR 488.94 million for excluding potential merger deal with Saudi Enaya

The capital hike is for the purpose of merger with Saudi Enaya Cooperative Insurance Co., through the transfer of all Saudi Enaya’s assets and liabilities to Salama via a share swap offer.

Salama’s capital increase shareholder circular will be published within sufficient time before the extraordinary general meeting (EGM), said the regulator.

CMA further added that its approval should never be considered as an endorsement of the merger’s feasibility, as it merely means that the legal requirements have been met, as per the Capital Market Law and its executive regulations.

The authority’s decision included approving the publication of the offer timetable, in addition to the offer document submitted by Salama Company to the shareholders of Enaya Company, which details the merger deal through a securities swap offer.

The offer document must include all relevant information that the shareholders need to know before making an informed decision when voting on the offer, including the offer information and risk factors, and must be published within sufficient time before the EGM of Saudi Enaya.

If Salama’s shareholders approve the capital increase, and Saudi Enaya shareholders accept the offer presented to them at the EGM of each, compensation shares will be issued to the eligible Enaya shareholders according to the shareholders’ register at the Securities Depository Center Company.

The shares of Enaya will also be delisted from the Saudi Exchange after shareholders have approved the capital increase and merger according to the offer submitted by Salama Company.

In February, Saudi Enaya and Salama signed a non-binding memorandum of understanding (MoU) to assess the feasibility of their potential merger, data compiled by Argaam showed.

In June, Saudi Arabia’s General Authority for Competition (GAC) issued a no-objection on the economic concentration process related to the proposed merger between both companies.

In August, Salama inked a binding merger agreement with Saudi Enaya under which the latter will merge into Salama, with the transfer of all its rights, obligations, assets, and contracts to Saudi Enaya. In return, Salama will issue 18.89 million shares in favor of Saudi Enaya’s shareholders.

The Insurance Authority (IA) approved on Nov. 16 the merger deal between the two companies.