The signing of the MoU comes as a result of the preliminary conclusions of the studies and negotiations in relation to the Proposed Merger which indicate that, subject to agreeing certain key terms, the Proposed Merger will be a positive transformational step in the business of the Company.
The Proposed Merger is expected to enhance the Company s leading position in the local and international petrochemical industry and the combined business is expected to result in significant synergies related to operational efficiencies and the combined company would become a stronger platform for further growth in the long-term.
The MoU has been signed by Eng. Esam Fouad Himdy, CEO and Managing Director of the Company, on behalf of the Company, and Eng. Ahmad Al-Abdulaziz Al Ohali, CEO and Managing Director of Sipchem, on behalf of Sipchem, in the city of Riyadh.
In this regard, Eng. Himdy and Eng. Al-Ohali have jointly commented as follows: If completed, we hope that the Proposed Merger will benefit our shareholders and our employees. Indeed, the expectation is that the Proposed Merger will be positively transformational and potentially have significant benefits for both companies.
The terms of the Proposed Merger will be underpinned by a shared commitment to achieve a fair result and create value for each company s shareholders based on the principles of a merger of equals.
This is an important precedent in the petrochemical sector in the Kingdom of Saudi Arabia, which will, God-willing, result in a larger, more capable, and more competitive company that can increase investments in new projects in the Kingdom and globally, and will provide exciting growth opportunities for management and employees, adding value to the shareholders of both companies.
Both companies have agreed that, in the event the Proposed Merger occurs, it will be implemented by way of an exchange of shares where, after the Proposed Merger is completed, the Company will become a subsidiary of Sipchem.
Under the terms of the Proposed Merger, Sipchem will issue 0.685 new shares for every one issued share in the Company. Accordingly, based on the agreed exchange ratio, if the Proposed Merger is completed, Sipchem will issue 300,574,575 new shares to the Company s shareholders in exchange for all issued shares in the Company.
The MoU does not constitute an offer by Sipchem to the Company s shareholders or to its board of directors, nor does it constitute an announcement of a firm intention to make an offer. Under the MoU, the Company and Sipchem have agreed to continue to co-operate with each other to complete the financial, technical, commercial, market and legal due diligence, agree an integration plan, and the governance and strategy of the combined group as well as the preparation of the definitive documentation required to implement the Proposed Merger.
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