Arabian Shield Cooperative Insurance Company (SASE:8070) entered into a Memorandum of Understanding to acquire AlAhli Takaful Company (SASE:8130) for approximately SAR 730 million on April 11, 2021. Under the terms of Memorandum of Understanding, shareholders of ATC will receive newly issued share of Arabian Shield in exchange for every share they hold in ATC. On July 12, 2021, Arabian Shield Cooperative Insurance Company entered into an agreement to acquire AlAhli Takaful Company . Based on the Merger Agreement, Arabian Shield will increase its share capital from SAR 400,000,000 to SAR 638,524,620 by issuance of 23,852,462 new ordinary shares with a nominal value of SAR 10 each (the “New Shares”) for full subscription by ATC's shareholders, against the purchase of all issued shares held by said shareholders in ATC based on their aggregate nominal value of SAR 166,666,670 such that Arabian Shield will be issuing 1.43114769137705 share against each one (1) share in ATC (the “Exchange Ratio”). Following the Capital Increase, the ownership percentage of ATC's shareholders in the share capital of Merged Entity will be 37.36%, whereas the ownership percentage of the current shareholders in the Merged Entity will be diluted from 100% to 62.64%. Proposed Transaction, should it proceed, will be completed by way of a merger (pursuant to the Companies Law and the Merger and Acquisitions Regulations issued by the Board of the Capital Market Authority and other relevant laws and regulations) with ATC (being the merged company) merging into Arabian Shield (being the merging company). The parties will also agree (i) the final structure of the Proposed Transaction, (ii) the final exchange ratio, subject to due diligence and valuation analysis, (iii) the composition of the board and (iv) The management structure for the combined entity. The future merged entity will continue to be branded as The Arabian Shield Cooperative Insurance Company and continue to be headquartered in Riyadh. The merger expects to absorb all of ATC employees into Arabian Shield and should not result in any involuntary redundancies. The expiry of the exclusivity period mentioned in the MoU. ATC intends to continue to conduct business as usual until the completion of the proposed merger. If agreement is terminated by either party in any circumstances as agreed between the parties, then contract breaching party shall pay SAR 3.75 million to other party as termination fee.

The proposed merger is subject to the completion of due diligence, satisfaction, agreement on final terms of the merger agreement and the approval of the competent authorities and the general assemblies of the companies. As of July 12, 2021, the Board of Directors of ATC recommended its shareholders to vote in favor of the transaction. Transaction is also subject to approvals from shareholders of Arabian Shield, Saudi Central Bank, Capital Market Authority of the Kingdom of Saudi Arabia, General Authority for Competition and Tadawu approval for listing of new shares. As on August 8, 2021, the transaction is approved by General Authority for Competition and is still subject to a number of conditions, including, obtaining the approval of Saudi Central Bank, the Capital Market Authority, the Saudi Stock Exchange Company, and the approvals to be obtained from the extraordinary general meeting of both ATC and Arabian Shield. As of October 27, 2021, Saudi Central Bank has approved the transaction. Merger remains subject to a number of conditions including obtaining the remaining regulatory approvals and the approvals of shareholders of Arabian Shield Cooperative and AlAhli Takaful. Aljazira Capital Company acted as financial advisor to Arabian Shield Cooperative Insurance Company and FALCOM Financial Services acted as financial advisor to AlAhli Takaful Company. Deloitte Financial Advisory Services LLP acted as financial and dude diligence provider and Zarei & Hamdan Partners Law Firm acted as legal advisor to AlAhli Takaful Company in the deal.

Arabian Shield Cooperative Insurance Company (SASE:8070) completed the acquisition of AlAhli Takaful Company (SASE:8130) on January 12, 2022.