‎“Qassim Cement” signs a binding implementation agreement ‎to acquire “Hail Cement” through a securities swap deal

Qassim Cement announced that it had concluded a binding implementation agreement with Hail Cement, according to which it was agreed that Qassim Cement would submit an offer to Hail Cement shareholders to acquire all Hail Cement shares in exchange for issuing new shares in Qassim Cement in accordance with the provisions of Article (26) of the Regulations. Merger and acquisition, in accordance with the rules for the offering of securities and continuing obligations issued by the Board of the Capital Market Authority (hereinafter referred to as the “Authority”), as well as in accordance with the terms and conditions stipulated in the implementation agreement (hereinafter referred to as the “deal”). .

The company provided more details below:

– Based on the swap factor and the closing price of Qassim Cement shares amounting to (63.20) riyals as on the date of 06-08-1445 AH (corresponding to 12-21-2023 AD) (which is the last trading day preceding the date of publishing this announcement), the price evaluation is Hail Cement shares for the purposes of the deal amount to (13.27) Saudi riyals, and the total valuation of Hail Cement shares for the purposes of the deal is one billion two hundred and ninety-nine million three hundred and twenty-eight thousand and eight hundred (1,299,328,800) riyals.

– The market value of Qassim Cement as of 06-08-1445 AH (corresponding to 12-21-2023 AD) (which is the last trading day prior to the date of publication of this announcement) is 5.68 billion riyals.

– Capital before the increase is 900 million riyals.

-The number of shares before the increase was 90 million shares.

The size of the capital increase is 20.55 million shares with a total nominal value of 205.59 million riyals.

– The percentage of capital increase is 22.8%

– Capital after the increase is 1.10 billion riyals.

-The number of shares after the increase is 110,559,000

– The share swap ratio (ratio) is (0.21) new share in Qassim Cement for every share of Hail Cement shares.

The potential effects or risks of issuing these shares on the shareholders of the current company and on the company and its decision-making after the completion of the deal. The ownership of the current Qassim Cement shareholders will be 81.4% of Qassim Cement’s capital after increasing its capital as a result of the deal, and ownership will be Hail Cement shareholders accounted for (18.6%) of Qassim Cement’s capital after increasing its capital as a result of the deal. After obtaining the necessary regulatory approvals, Qassim Cement will publish a circular to its shareholders that includes all the details related to the capital increase and the risks related to that.

Percentage of ownership of the listed company in (the company to be acquired) / (the asset to be purchased) after issuing shares (%) 100%

The ownership percentage of the partners to whom new shares will be issued after the completion of the acquisition process is 18.6%

Additional information:

This announcement does not represent an announcement of a firm intention to submit an offer by Qassim Cement for the purposes of the Mergers and Acquisitions Regulations issued by the Capital Market Authority Council. The issuance of a firm intention announcement is subject to a number of conditions contained in the Implementation Agreement related to coordination with a number of regulatory bodies to ensure approval requirements for the transaction. The confirmed intention to submit an offer will be announced at a later time after these conditions have been met, and in all cases before the shareholders’ circular and the offer document are published by Qassim Cement, and the Board of Directors’ circular by Hail Cement.

Please review the attached file for more details about the deal, its conditions, motives, and other details.

Qassim Cement established a private investment fund managed by a licensed financial market institution for the purpose of investing in stocks and securities, and Qassim Cement owns all of its units. This investment fund owns two million three hundred and eight thousand two hundred and six (2,308,206) shares of Hail Cement shares, representing 2.36% of Hail Cement’s capital. This investment fund is considered a related party in accordance with the Mergers and Acquisitions Regulations.

The Implementation Agreement shall expire after one year from the date of its conclusion in the event that the terms of the deal are not met or the obligation to any of them is exempted pursuant to a written agreement between the two parties (unless the parties agree in writing on another date), and it also terminates in one of the termination cases mentioned below.

The Implementation Agreement shall expire with immediate effect, and thus all the rights and obligations of the two companies under the agreement shall expire (with the exception of some rights and obligations that remain binding even after termination, such as confidentiality and dispute resolution) in the event of specific situations that include the following:

1- Either party shall provide a written notice of termination of the agreement to the other party in the event that one of the parties violates any of the terms and conditions of the implementation agreement and this results in the occurrence of a material negative event (according to the definition agreed upon in the implementation agreement), including cases of breach In this context, violating the restrictions on doing business specified in the implementation agreement, breaching the guarantees provided, or breaching the obligations contained in the implementation agreement related to preparing and submitting the documents required under the relevant regulations and providing all the information required to enable the other party to prepare those documents.

2- Failure to fulfill the terms of the deal or to waive the obligation to any of them pursuant to a written agreement between the two parties before the end of one year from the date of concluding the implementation agreement (unless the two parties agree in writing on another date).

3- Both parties agree in writing to terminate the agreement

The company said in a statement today on “Tadawul” that the completion of the deal in accordance with the implementation agreement is subject to a number of conditions that must be met, and the following is a summary of those conditions:

1- Obtaining all required approvals from the Capital Market Authority in relation to the deal.

2- Obtaining the approval of the Saudi Tadawul Company to list the compensation shares on the Saudi Stock Exchange (Tadawul) and any other approvals that the Saudi Tadawul Company may request in relation to the deal.

3- Submitting any notifications that may be required to the Securities Depository Center Company “Edaa” in relation to the deal.

4- Obtaining a no-objection from the General Authority for Competition regarding the deal or the expiry of the time period for reviewing the economic concentration request by the General Authority for Competition as specified in the competition system.

5- Obtaining a no-objection from the Ministry of Commerce regarding the proposed amendments to the bylaws of Qassim Cement.

6- Obtaining the approval of the required majority of Qassim Cement shareholders on the acquisition decisions in the extraordinary general assembly.

7- Obtaining the approval of the required majority of Hail Cement shareholders on the acquisition decisions in the extraordinary general assembly.

8- The non-occurrence of a material negative event (according to the definition agreed upon in the Implementation Agreement) and its continuation.

9- Not to breach specific guarantees provided by both Qassim Cement and Hail Cement under the Implementation Agreement, unless the breaching party corrects the breach in question in a manner acceptable to the other party if that breach is capable of correction.

10- No decision, system, instruction, order, ruling or decree has been issued by any governmental body in the Kingdom that makes the completion of the deal – in accordance with the provisions of the Implementation Agreement – an irregular or legal matter.

11- Obtaining the approval of a number of contracting parties with each of the two companies regarding the deal, in accordance with what is contained in the implementation agreement.

This comes in reference to the announcement of Qassim Cement Company (hereinafter referred to as “Qassim Cement” or “the Company”) on the Saudi Tadawul website on 02-29-1444 AH (corresponding to 09-25-2022 AD) that it had concluded a non-binding memorandum of understanding. With Hail Cement Company (hereinafter referred to as “Hail Cement”) in connection with a potential securities swap transaction, including a non-binding agreement on the stock swap factor and the implementation structure of the potential transaction.