CMA approves Gulf Union Alahlia capital hike for merger with GGI

Logo of Gulf Union Alahlia Cooperative Insurance Co.

The Capital Market Authority (CMA) approved Gulf Union Alahlia Cooperative Insurance Co.'s request to increase its capital from SAR 458.95 million to SAR 687.18 million, through issuing 22.82 million ordinary shares.

The capital hike is coming for a merger with Gulf General Cooperative Insurance Co. (GGCI), under which the latter's assets and liabilities would be transferred to Gulf Union Alahlia through a securities exchange offer.

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

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

The offer document of Gulf Union Alahlia will be published to GGI shareholders for the merger process within sufficient time before the EGM of GGI. 

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 Gulf Union Alahlia shareholders approve the capital increase, and GGI shareholders accept the offer in their EGMs, the new shares will be issued to GGI shareholders who are registered with the Securities Depository Center Co. (Edaa). In addition, GGI will be delisted from the Saudi Exchange (Tadawul) after Gulf Union Alahlia shareholders approve the capital top-up and GGI 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 available with Argaam, the two Saudi insurance firms signed on Dec 9, 2024, a binding merger agreement. The deal entails transferring all of GGI’s rights, obligations, assets, and contracts to Gulf Union Alahlia.

In return, Gulf Union Alahlia will issue 22.82 million ordinary shares at a nominal value of SAR 10 each to GGI shareholders.

Meanwhile, GGI shareholders will receive a 0.76 share in Gulf Union Alahlia for each share they hold.

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.​​