Saudi Enaya Cooperative Insurance Company (Enaya) and Salama Cooperative Insurance Company (Salama) have announced that they have entered into a binding merger agreement.
The signing of the agreement on 14 August 2025 followed both parties reaching a memorandum of understanding earlier this year to evaluate a potential merger between the companies, the appointment of financial advisers, and obtaining the General Authority for Competition’s non-objection to the economic concentration resulting from the proposed merger.
Under the binding merger agreement, Enaya will be merged into Salama and all of Enaya’s rights, liabilities, assets and contracts of Enaya will be subsumed by Salama in exchange for Salama’s issuance of 18,984,000 new ordinary shares with a nominal value of SAR10 ($2.67) each in Salama to Enaya’s shareholders. The merger will result in the delisting of Enaya’s shares, as Enaya will cease to exist and all its rights and obligations will be transferred to Salama.
Salama also announced its firm intention to submit an offer pursuant to the merger and in line with the terms and conditions of the merger agreement.
Proposed capital increase
For the purpose of the merger, Salama will increase its capital from SAR300m ($80m) to SAR488.94m and the number of its ordinary shares from 30m to 48.894m ordinary shares, consequently increasing Salama's capital by 62.98% from its current capital.
Eligible Enaya shareholders will receive 0.8215 shares in Salama for each share they own in Enaya.
Based on the share exchange ratio and the closing share price of Salama of SAR12.40 as of 13 August 2025 (which is the last trading day prior to the signing of the merger agreement), each Enaya share is valued—for the purposes of the merger—at approximately SAR10.19 and Enaya's total shares are valued at approximately SAR234,285,600. This valuation represents a premium of 9.56% compared to the closing share price of Enaya of SAR9.30 on the Saudi Exchange on 13 August.
Salama's existing shareholders will own approximately 61.36% of Salama's capital and Enaya’s shareholders will own 38.64% after the capital increase.
The merger is subject to certain conditions and approvals, including obtaining regulatory and shareholders' approval.
Merger rationale
Salama said that the rationale for the merger includes, but is not limited to, the following:
1. Increasing market share and expanding and diversifying the customer base: The merged company is expected to achieve a higher market share through a significant increase in GWP relative to the total GWP of all companies in the insurance sector. Additionally, the merged company is anticipated to benefit from a larger and more diversified customer base as a result of combining the customer bases of both merging insurers. This, in turn, is expected to enhance the merged company’s position as well as its operational and financial performance.
2. Improvement in operational efficiency resulting from integration of operations: The merged company will be able to enhance operational efficiency, thereby reducing operating expenses and general and administrative costs in line with its new scale of operations. This will enable the merged company to offer insurance products at more competitive prices in the long term.
3. Enhancement of the merged company’s competitive position in the insurance market: The merger is expected to increase the merged company’s market share and expand and diversify its customer base.
4. Improvement of the merged company’s capital efficiency: The merged company will have a stronger capital base with enhanced solvency levels. This will enable it to better withstand higher risk levels, offer improved insurance services, and invest its funds more effectively. Additionally, the strengthened capital base is expected to contribute to obtaining a higher credit rating from global financial rating agencies.
5. Leveraging managerial, technical, and technological expertise: The merged company is expected to benefit from the combined managerial, technical, and technological expertise and infrastructure of both merging companies.
6. Enhanced negotiation power with reinsurers: The merger will create greater value for the merged company in terms of its market share of total written premiums relative to the sector as a whole. Consequently, the merged company’s bargaining power with reinsurers will be stronger due to its larger business volume post-merger. This stronger position is expected to lead to more favourable pricing and terms in reinsurance agreements, thereby reducing reinsurance costs.
7. Expansion of the merged company’s geographic reach: The merged company is expected to have a wider geographic presence by combining the branch networks of both Enaya and Salama.