Saudi Enaya Cooperative Insurance Company and Salama Cooperative Insurance Company have issued separate statements announcing the signing of a non-binding Memorandum of Understanding (MoU) on 25 February 2025 to evaluate a potential merger between the two companies.
Both companies will conduct operational, technical, financial, legal and actuarial due diligence and engage in non-binding discussions on the terms and conditions of the potential merger, according to their statements that were lodged with Tadawul, the Saudi stock exchange.
The two insurers agreed that, in the event of signing the binding merger agreement, securing the regulators’ and shareholders’ general assembly approvals, the potential merger would be consummated via a share swap. Under the proposed transaction, Salama would be the merging company and Enaya, the merged company.
The share exchange would involve increasing Salama’s capital and issuing new shares to the shareholders of Enaya based on a swap ratio to be agreed between the parties. The share-for-share exchange ratio between the shareholders of the two companies shall be determined after concluding all necessary due diligence by each party.
Enaya said that the MoU shall terminate on the earlier of: (i) the execution of the merger agreement by the company and Salama (ii) the expiry of 12 months from the date of signing the MoU, (iii) the mutual written agreement of both companies to terminate the MoU, (iv) either party providing written notice terminating the MoU to the other at any time five months following the date of execution of the MoU.
Salama said that the execution of the potential merger would be subject to both companies reaching a binding final agreement defining its terms and conditions. The completion of the deal is subject to a number of regulatory approvals, including the approval of the Insurance Authority, the Capital Market Authority, the Saudi Exchange and the General Authority for Competition, and the approval of the extraordinary general assemblies of the shareholders of Salama and Enaya, in accordance with the relevant regulatory requirements.
Enaya has been in the news over potential M&A activity, in recent years. In December 2023, Enaya’s shareholders rejected a merger with United Cooperative Assurance. That was not Enaya’s first attempt at merging with another insurer. In January 2022, Enaya’s shareholders rejected a proposed offer of a merger from Amana Cooperative Insurance.