Gulf Union Cooperative Insurance has offered one share for 1.74 shares of Ahlia for Cooperative Insurance under a swap deal for the planned merger between both entities, according to a stock exchange filing.
Gulf Union will hold an extraordinary general meeting on 27 January 2019 for shareholders to vote on its capital increase to SAR241.94m ($64.5m) from SAR150m by issuing 9.194m ordinary shares to acquire all the shares of Al Ahlia.
The boards of both Tadawul-listed insurers had signed the merger agreement on 10 May last year, under which Gulf Union will acquire the entire share capital of Al Ahlia, by issuing nine million new shares to Al Ahlia’s shareholders.
The merger, expected to be finalised in May, has been endorsed by the Saudi Arabian Monetary Authority (SAMA).
Gulf Union’s CEO Mr Munir Al Borno, told Argaam, “The new synergy will significantly cut operating expenses, mainly leasing costs. The new entity will operate through a single headquarters in the joint markets where they operate.”
The merged insurer will also benefit from the broad experience of professional cadres in both companies, as the local insurance sector suffers a lack of skilled employees.
In March 2017, the insurers started talks on a potential merger.