In a strategic move aimed at strengthening its financial solvency and creating a more robust insurance entity in the Saudi market, the Extraordinary General Assembly of Salama Cooperative Insurance Company approved a 62.98% increase in the company's capital during its meeting held yesterday, Sunday. This decision will raise the capital from SAR 300 million to SAR 488.94 million.
Details of the merger and share swap deal
In an official statement published on the Saudi Stock Exchange (Tadawul) website on Monday, the company clarified that the capital increase will be achieved through the issuance of 18.89 million new ordinary shares. The exchange ratio has been set at 0.82 shares of Salama Insurance Company for each share held in Enaya Cooperative Insurance Company. This step is a key component of the merger procedures between Enaya and Salama, in accordance with the regulations and bylaws of the Saudi Companies Law and the merger agreement concluded between the two parties.
The economic context and the importance of integration in the insurance sector
This merger comes at a time when the Saudi Arabian insurance sector is witnessing a surge in mergers and acquisitions, supported and encouraged by the Saudi Central Bank (SAMA). These trends aim to reduce the number of small and medium-sized enterprises (SMEs) in the market, thereby creating stronger financial entities capable of managing risks, meeting financial obligations, and achieving higher solvency margins. The merger between Salamah and Enaya is considered a significant corrective step to enhance operational efficiency and reduce redundant administrative expenses, which will positively impact shareholder equity and the services provided to policyholders.
Remaining legal procedures and approvals
Although Salama has received the green light from its shareholders, the completion of the deal remains contingent upon the approval of Enaya's shareholders. The transaction will only become effective after a vote of approval at Enaya's Extraordinary General Assembly meeting. Upon approval, all of Enaya's assets, rights, obligations, and contracts will be transferred to Salama, in accordance with Articles (225) and (227) to (229) of the Companies Law, as well as the Capital Market Authority's regulations.
New ownership structure after the merger
Based on the terms of the deal, the merger will result in a change in the ownership structure of the acquiring company. Salama's current shareholders will own approximately 61.36% of the new total share capital. Conversely, Enaya's shareholders will own approximately 38.64% of the new entity after the merger takes effect. These percentages are calculated based on total shares, disregarding any prior cross-ownership between the two companies before the merger decision.
