LIVA, Malath sign MoU on potential merger

Logos of LIVA Insurance Co. and Malath Cooperative Insurance Co. 

LIVA Insurance Co. and Malath Cooperative Insurance Co. signed a non-binding memorandum of understanding (MoU) on Aug. 21 to evaluate a potential merger, the companies said in separate statements to Tadawul.

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Both companies will conduct operational, technical, financial, legal, and actuarial due diligence and engage in non-binding discussions on the terms and conditions of the potential merger.

The proposed deal will be implemented via a legal merger, one entity, the MoU noted, adding that the implementation of the proposed deal is subject to the two companies entering into a legally binding agreement that specifies the terms and conditions of the deal.

The two parties agreed that, in the event of signing the binding agreement, the merger would be implemented through a share swap deal, where one of the companies will issue new shares to the other.

The share-swap exchange ratio will be determined after concluding (to the satisfaction of each party) all necessary due diligence by LIVA and Malath.

Any legally binding agreement entered into by both companies in relation to the proposed deal will include a number of pre-conditions, including, but not limited to, obtaining the required regulatory approvals.

The insurers are required to obtain the approvals of the Insurance Authority, the Capital Market Authority (CMA), the Saudi Exchange (Tadawul), and the General Authority for Competition. In addition, they require a go-ahead from respective shareholders.

The statements highlighted that the MoU is effective from the date of its signing until its completion, the conclusion of negotiations by either party or after one year from the date of signing the MoU, whichever is earlier.

Both companies will continue to announce any material developments regarding the proposed merger in accordance with the relevant laws and regulations.

Meanwhile, the two companies intend to continue to conduct their business as usual until the completion of the proposed merger process.

No related parties have been identified so far, and a detailed analysis will be conducted and will be announced later, if any.

Signing the MoU does not mean that the proposed merger will be approved by the two companies, and further announcements will be made when appropriate, according to the statement.