Gulf Union Alahlia, GGI cancel merger proposal

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) announced today, March 25, the termination of their proposed merger deal, including the offer made to GGI’s shareholders.

According to the planned merger’s offer document and shareholders circular, the proposed deal is conditional on compliance with a “No Material Adverse Effect” clause. This was defined to include any event that results in a ≥15% decline in the final valuation of either company as of June 30, 2024.

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Given the occurrence of a material adverse event affecting GGI, Gulf Union Alahlia’s board of directors reviewed the matter, and GGI engaged in discussions with the offeror. As a result, both companies have agreed to cease the merger agreement as of today.

In separate Tadawul filings, the two companies said the necessary steps will be taken to cancel the extraordinary general meetings (EGMs) scheduled for March 27, which were set to vote on the planned merger deal. Further details will be announced separately.

According to data available on Argaam, Gulf Union Alahlia and GGI signed on Dec 9, 2024, a binding merger agreement. The merger had entailed transferring all of GGI’s rights, obligations, assets, and contracts to Gulf Union Alahlia. In return, Gulf Union Alahlia would have issued 22.82 million ordinary shares at a nominal value of SAR 10 each to GGI’s shareholders.

The Capital Market Authority (CMA) had recently approved Gulf Union Alahlia's request to increase its capital from SAR 458.95 million to SAR 687.18 million, through issuing 22.82 million ordinary shares. The capital hike had targeted the merger with GGI, under which the latter's assets and liabilities would be transferred to Gulf Union Alahlia through a share swap.

The two companies had scheduled their deciding EGMs on March 27.