Saudi insurers Arabian Shield, Alahli Takaful ink MoU on potential merger

Agree to begin reciprocal due diligence process

Islamic finance. Image use for illustrative purpose.

Islamic finance. Image use for illustrative purpose.

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Saudi Arabia’s Arabian Shield Cooperative Insurance Co entered a memorandum of understanding (MoU) on Monday with Alahli Takaful Co (ATC) to begin a reciprocal due diligence process and negotiate the final terms of the potential merger, the companies told the Saudi stock exchange, Tadawul. 

The two companies agreed the following on a non-binding basis:

  • ATC will merge into Arabian Shield.
  • Valuation will be based on the adjusted equity book value method in addition to the embedded value of the protection and savings portfolio of ATC.
  • ATC shareholders will receive newly issued share of Arabian Shield in exchange for every share they hold in ATC.
  • The future merged entity will continue to be branded as the Arabian Shield Cooperative Insurance Co. and continue to be headquartered in Riyadh
  • All of ATC’s employees will be absorbed into Arabian Shield, with no involuntary redundancies.

Arabian Shield has appointed AlJazira Capital as its financial advisor, while Falcom Financial services was hired by ATC as its financial advisor.

The agreement may be terminated if either Arabian Shield or ATC provides a written notice terminating the MoU to the other at any time four months from the date of execution of the MoU.

The proposed merger is subject to the completion of due diligence, agreement on final terms of the merger, as well as the approval of the competent authorities and the general assemblies of the companies, they said.

(Writing by Brinda Darasha; editing by Daniel Luiz)

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