Aslak signs non-binding agreement to acquire 40% stake in Al Raeda

Aslak products​

United Wire Factories Co. signed today, Dec. 31, a non-binding agreement with Al Raeda Industrial Investment Co. to acquire 40.0% of the latter’s issued shares in return for issuing new shares for the selling shareholders of Al Raeda in in ASLAK, according to a statement to Tadawul.

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On this basis, both ASLAK and Al Raeda have agreed to proceed with the relevant due diligence in relation to the contemplated transaction, it added.

Subject to the final valuation of Al Raeda and the results of the relevant due diligence exercise, ASLAK and Al Raeda will agree on the exchange ratio, where exchange ratio is defined as the newly issued shares in ASLAK that will be received by the selling shareholders of Al Raeda for every sale share they own.

In the context of the Exchange Ratio, the valuation of Aslak shares for the purpose of the Contemplated Transaction was fixed at SAR [29.7] per share, which was calculated based on the daily volume-weighted average price (VWAP) for the last 60 trading days from the execution date of the Non-Binding Agreement.

The agreement will be valid for six months from the execution date, to be mutually extended by both parties for an agreed new period.

No financial advisor has been appointed at this stage. ASLAK will later announce any developments about the appointment of its financial advisor.

Both parties agreed on a number of terms and conditions, including certain business restrictions on Al Raeda from the execution date of the Non-Binding Agreement, a number of warranties and indemnities, the manner of completing the Contemplated Transaction, in addition to other usual terms and conditions.

Further, Aslak intends to conclude the due diligence process and sign the definitive agreements in connection with the Contemplated Transaction, if both parties agree to its final terms, as soon as practicable.

The transaction is subject to the approval of the relevant regulatory authorities, the approval of Aslak’s extraordinary general assembly to increase the capital for the purpose of acquisition, and the approval of Al Raeda’s ordinary general assembly on the transaction, as follows:

1. The approval of the Capital Market Authority in relation to Aslak’s capital increase application.

2. The approval of the Saudi Exchange to list the consideration shares.

3. The non-objection of the General Authority for Competition on the transaction.

4. The approval of the requisite majority of Aslak shareholders on the acquisition resolutions in the Transaction’s extraordinary general assembly.

5. The approval of the requisite majority of Al Raeda shareholders on the transaction at Al Raeda ordinary general assembly, given that it is a significant transaction under the rules of the Capital Market Authority.

The Transaction is also subject to a number of conditions precedent specified in the Agreement, which include terms related to the contracts and operations of the two target companies and other conditions specified by both parties.

After obtaining the approval of the Capital Market Authority, Aslak will publish a circular to its shareholders that includes more details about the Contemplated Transaction, business disclosures related to AL RAEDA, risk factors and other important details of the Contemplated Transaction, which shareholders should read fully and carefully when published.

ASLAK will also announce any material developments in connection with the Contemplated Transaction in accordance with the applicable laws and regulations.

According to data available to Argaam, Aslak signed in November, 2023 a MoU with Al Raeda Industrial Investment Co. for possible acquisition of a stake in the company, upon reaching a final agreement.