Gulf Union Alahlia, GGI pen binding merger pact

Logos of Gulf Union Alahlia Cooperative Insurance Co. and Gulf General Cooperative Insurance Co. (GGI)

Gulf Union Alahlia Cooperative Insurance Co. and Gulf General Cooperative Insurance Co. (GGI) signed on Dec 9. a binding merger agreement.

In two separate statements to Tadawul, the companies revealed their agreement to merge GGI into Gulf Union Alahlia.

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The merger entails transferring all of GGI’s rights, obligations, assets, and contracts to Gulf Union Alahlia. In return, Gulf Union Alahlia will issue 22.82 million ordinary shares with a nominal value of SAR 10 per share to GGI’s shareholders.

GGI shareholders will receive 0.76 share in Gulf Union Alahlia for each share they hold.

Gulf Union Alahlia confirmed its intention to submit an offer for the merger in line with the terms and conditions outlined in the agreement.

The company also noted that the total anticipated costs of the merger will be disclosed in a shareholder circular, to be published after obtaining the regulatory approvals.

Additionally, the expected timeline for the merger will be outlined in the board of directors' circular, which will also be released following regulatory clearance, the statements added.

The two insurers anticipate that the merged entity's market share will grow as a result of an increase in total written premiums.

The merged entity’s market share is expected to reach 1.57%, up from 1.06% for Gulf Union Alahlia and 0.51% for GGI before the merger, reflecting a 0.51% increase in market share for the merged company over Gulf Union Alahlia’s pre-merger share.

Additionally, they expect the merged company to benefit from a larger customer base due to the integration of customer portfolios. This is anticipated to enhance the merged company’s competitive position and improve its operational and financial performance relative to the current standings of both companies.