In a strategic move aimed at strengthening the private education sector in Saudi Arabia and the region, Gulf Training and Education Company announced the signing of a non-binding memorandum of understanding with GFH Financial Group to explore ways of joint cooperation to integrate the assets and companies of both parties in the basic education sector.
Deal details and targeted assets
The statement published on the Saudi Stock Exchange (Tadawul) website revealed that the agreement stipulates a study on merging the assets and companies of Gulf Training in the basic education sector, which includes 13 schools located in major Saudi cities: Riyadh, Dammam, Jeddah, Khobar, Dhahran, and Al-Ahsa. In contrast, GFH's assets targeted for merger include 10 schools and one university, geographically distributed across Saudi Arabia, Bahrain, the UAE, and Tunisia.
This merger is expected to create a huge educational entity with a student base of approximately 25,000 students, making it one of the largest educational entities in Saudi Arabia and the region, as the merger will be done through a 100% in-kind share exchange.
Roadmap towards listing on "Tadawul"
The significance of this memorandum extends beyond the merger itself; it encompasses an ambitious plan to establish a new entity (whether a Saudi joint-stock company or an educational fund) with the aim of listing it on the Saudi Stock Exchange (Tadawul). The two parties have set a timeframe of 24 to 36 months from the completion of the transaction to execute this initial public offering (IPO), subject to obtaining all necessary regulatory approvals from the Capital Market Authority and other relevant authorities.
The context of the education sector and Vision 2030
This move aligns with the goals of Saudi Vision 2030, which places great emphasis on developing the education sector and enhancing private sector participation. The Saudi market is witnessing a growing trend towards mergers and acquisitions aimed at creating strong entities capable of providing high-quality, globally competitive educational services. Combining the local expertise of Gulf Training Company with the regional and investment experience of GFH Group – listed on the Bahrain, Kuwait, Dubai, and Abu Dhabi stock exchanges – will enhance operational efficiency and attract further foreign investment to the Saudi education sector.
Implementation procedures and timeline
The memorandum of understanding is valid for six months, renewable with the written consent of both parties. During this period, the two companies will appoint independent advisors (financial, legal, and tax) and certified appraisers to conduct due diligence and final asset valuations. The company confirmed that the memorandum is binding with respect to confidentiality but does not legally obligate the execution of the transaction until the final agreements are signed. The ownership percentages in the new entity will be determined based on the agreed-upon valuation results.
