Saudi Enaya, Amana Insurance ink MoU for merger evaluation

Saudi Enaya Cooperative Insurance Co. signed, on Nov. 15, a non-binding memorandum of understanding (MOU) with Amana Cooperative Insurance Co. to evaluate a potential merger between the two companies.

The companies said in separate bourse statements that they will conduct technical, financial, legal and actuarial due diligence and engage in non-binding discussions on the terms and conditions of the potential merger.

The two companies agreed that in the event the proposed merger occurs, it will be implemented by way of share swap where, after the proposed merger is completed, Amana Insurance will issue new shares to Saudi Enaya shareholders in exchange for all of its issued shares.

The two companies have also agreed that the methodology used for valuation will be based on equity book value (after any mutually agreed due diligence adjustments) and that the swap ratio between Amana Insurance and the shareholders of Saudi Enaya will be calculated using the respective adjusted equity book value per share on a mutually agreed cut-off date.

The MOU would expire on the earlier of the signing of the merger agreement or after 12 months of signing the deal.

The proposed merger is subject to the completion of due diligence by both companies, agreement on final terms and conditions of the merger agreement, and the approval of the competent authorities and the general assemblies of Amana Insurance and Saudi Enaya. The entry into the MoU does not mean that the proposed merger will be agreed between the two companies.

Meanwhile, both insurers intend to continue to conduct business as usual until completion of the proposed merger.

The companies will continue to announce any material developments regarding the proposed merger in accordance with the relevant laws and regulations.

According to data compiled by Argaam, Amana Insurance and Saudi Enaya announced in October this year that their boards of directors have approved to evaluate a potential merger.

Saudi Enaya has appointed BMG as the financial advisor for the proposed merger with Amana Insurance.

Last March, the insurance sector witnessed a merger between Walaa Cooperative Insurance Co. and Metlife AIG ANB Cooperative Insurance Co., in addition to a number of other potential mergers being studied, according to the data compiled by Argaam.

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