Saudi Arabia: CMA greenlights Walaa's capital increase for merger with SABB Takaful
Source: Middle East Insurance Review | Sep 2022
The Capital Market Authority (CMA) has approved the request from Walaa Insurance to increase its capital to SAR850.58m ($226.8m) from SAR646.39m by issuing 20.42m ordinary shares.
The capital increase is to merge SABB Takaful into Walaa and transfer all of SABB Takaful’s assets and liabilities to the latter through a share swap transaction.
Walaa’s capital increase shareholder circular will be published within sufficient time before the next extraordinary general meeting (EGM). The circular must include all relevant information that the shareholders need to know before making an informed decision when voting on the capital increase for the purpose described including the capital top up and risk factors.
CMA’s resolution included the approval of the proposed offer timetable, as well as the publication of the offer document by Walaa to SABB Takaful’s shareholders. The offer document will be published for SABB Takaful’s shareholders within sufficient time before SABB Takaful’s EGM.
If Walaa Insurance shareholders approve the capital increase and shareholders of SABB Takaful accept the offer in their respective EGMs, the new shares will be issued to SABB Takaful’s shareholders registered with the Securities Depository Center register. Accordingly, SABB Takaful will be delisted from the Saudi Exchange after the merger decision come into effect.
A voting decision without reading the shareholders circular and the offer document carefully reviewing its content may involve high risks, said media reports. The shareholder should carefully read the shareholders circular and the offer document to be able to reach a proper voting decision. If the shareholders circular and offer document prove difficult to understand, it is recommended to consult an authorised financial adviser, the CMA said.
CMA’s approval should never be considered as an endorsement of the merger’s feasibility, said the reports. The authority’s approval of the application merely means that the legal requirements as per the Capital Market Law and its implementing regulations have been met.
In February 2022, Walaa signed a binding merger agreement with SABB Takaful, with the companies agreeing to merge through a share swap transaction. Walaa will issue 0.6 nominal shares against each issued share in SABB Takaful for the benefit of eligible shareholders. M