Al Arabia announces details of MBC Group's deal to exercise purchase option, raise stake

Logo of Arabian Contracting Services Co.

Arabian Contracting Services Co. (Al Arabia) announced details of the agreement between MBC Group Holding Ltd. and Engineer Holding Group (EHG), with regard to the rights to exercise its purchase option and increase its stake to 20%.

In a bourse statement, Al Arabia said details of the deal included agreeing on the right of purchase option and determining the share purchase price (according to market conditions at that time) since April 24, 2020, which is also the day of the agreement between Al Arabia and MBC to sell and buy shares in order to sell 2.5 million of the company’s shares, or 5% of capital, as referred to in the prospectus.

Providing the right of purchase option to MBC was for the strategic purpose of entering into alliances with the aim of expanding regionally through cooperation with the latter due to its distinguished position in Middle Eastern markets. This serves the company’s goals of regional expansion to advance its position, maintain its leadership status and complete its excellence in digital transformation to provide outdoor advertising solutions regionally. This agreement is one of the merits of this strategy, represented in increasing MBC’s stake in Al Arabia to 20%.

On Sept. 15, 2022, a share purchase agreement was sealed between EHG and MBC, under which the former will sell the purchase option shares to MBC via a private purchase and sale transaction for a total amount of SAR 497.25 million, or SAR 66.30 per share.

The company noted that the beginning of discussions to provide the option purchase was on April 24, 2020, amid the COVID-19 pandemic. The agreed share price was based on market value at the time. The share price stated in the agreement does not reflect the current market value.

Al Arabia announced, on Sept. 18, that MBC, a major shareholder, exercised its purchase option to 15% of the company’s capital from another substantial holder, EHG. Accordingly, MBC’s ownership in Al Arabia will increase to 20%, while EHG’s sake will decline from 65% to 50%, according to Argaam's data.

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