United Assurance and Saudi Enaya sign MOU to assess feasibility of merging two companies

The United Cooperative Assurance Company announced on Tuesday the signing of a non-binding Memorandum of Understanding (the “MOU”) with the Saudi Enaya Cooperative Insurance Co on Monday 05/12/2022 to evaluate a potential merger between the two companies.
Both companies 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 have 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, the United Cooperative Assurance Company will issue new shares to the Saudi Enaya Cooperative Insurance Co shareholders in exchange for all issued shares of the Saudi Enaya Cooperative Insurance Company.
The two companies have initially 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 the United Cooperative Assurance Co and the shareholders of the Saudi Enaya Cooperative Insurance Co shall be calculated using the respective adjusted equity book value per share as at a mutually agreed cut-off date.
The United Cooperative Assurance Co has appointed AlInma Capital as its financial advisor for the proposed merger.
The financial advisors and other advisors involved in the due diligence and verification process are expected to evaluate the financial strength rating, performance record, product offerings, potential business opportunities, potential merger incentives, if any, compliance costs on account of existing contracts on account of business operations, employee retention, company location, and any other information, and any relevant adjustments that may have an effect on the carrying amount.
The proposed merger is subject to the completion of due diligence to the parties’ satisfaction, agreement on final terms and conditions of the merger agreement, and the approval of the competent authorities and the general assemblies of The United Cooperative Assurance Co and the Saudi Enaya Cooperative Insurance Co.
The entry into the MoU does not mean that the proposed merger will be agreed between the two companies.