Medgulf Insurance and Buruj Insurance Sign MoU to Evaluate Feasibility of Merger

Buruj Cooperative Insurance Company (“Buruj” or the “Company”) announced on Sunday the signing of a non-binding Memorandum of Understanding (the “MOU”) with The Mediterranean and Gulf Insurance and Reinsurance Co. (“MedGulf”) on July 27, 2024, to evaluate a potential merger between the two companies (the “Proposed Transaction”).

According to the statement published on Tadawul, both companies will conduct financial, tax, legal, and actuarial due diligence and engage in non-binding discussions on the terms and conditions of the Proposed Transaction.

The MOU is valid from signing and will remain so until completion, termination of negotiations by one party, or the expiry of one year from the date of signing the memorandum, whichever is earlier. The obligations under the MOU, including confidentiality, will continue for three years after the MOU’s expiry or termination.

MedGulf has appointed HSBC Saudi Arabia as its financial advisor and Khoshaim & Associates as its legal advisor in connection with the Proposed Transaction. Buruj will announce the appointment of its financial advisor at a later stage.

Major Terms in the Memorandum:

Pursuant to the MOU, Buruj and MedGulf have agreed on the following provisions:

The Proposed Transaction, should it proceed, would be implemented through a merger with MedGulf as the merging company and Buruj as the merged company. This would be done through a share exchange offer, increasing MedGulf’s capital and issuing new shares to the shareholders of Buruj based on an agreed exchange ratio.

Both companies will negotiate definitive agreements in relation to the Proposed Transaction, setting out the relevant commercial terms, including the final structure and the exchange ratio.

The MOU includes customary provisions regulating confidentiality, restrictions on trading, and other related matters.

It should be noted that the implementation of the Proposed Transaction is subject to the companies agreeing on a final binding agreement that determines the terms and conditions of the transaction. The terms and conditions of the final binding agreement will include obtaining all required regulatory approvals and the approval of the extraordinary general assembly of each company on the Proposed Transaction and its related matters. Therefore, the execution of the MOU does not mean the parties will reach a final and binding decision regarding the Proposed Transaction or that the Proposed Transaction will be completed.

The parties will work to complete all the relevant requirements of the Proposed Transaction, including conducting due diligence, executing the definitive binding agreement, and obtaining regulatory approvals, before presenting the Proposed Transaction to the shareholders of both companies in accordance with the applicable laws and regulations.

The completion of the Proposed Transaction is subject to a number of regulatory approvals, including the approval of the Insurance Authority, the Capital Market Authority, the Saudi Exchange, and the General Authority for Competition, as well as the approval of the extraordinary general assemblies of the shareholders of Buruj and MedGulf, in accordance with the relevant regulatory requirements.