Arab News, Monday, Sep 26, 2022 | Safar 30, 1444
Qassim signs MoU to acquire Hail Cement as Saudi megaprojects set to drive demand
Saudi Arabia:
Qassim Cement Co. has signed a non-binding memorandum of understanding with Hail
Cement Co. regarding a securities exchange transaction, in which the former will
acquire all of Hail’s issued shares.
Following the announcement, shares of Hail led the
market’s gainers with a 8.02 percent increase at SR13.2 ($3.52), while Qassim
Cement’s shares fell 2.93 percent at SR72.8.
Speaking to Arab News, analysts said this move was
motivated by the strong and high demand for cement in the Kingdom in the near
future.
“The huge and megaprojects such as NEOM and AMAALA
projects need a lot of cement. Qasim plans to acquire all shares from Hail in
preparation for any expansion in the cement market in future,” said Saudi
economist Ali Alhazmi.
Abdullah Baeshen, a Riyadh-based economist, said
that this move is an indication that both companies are looking to compete with
other companies in the cement market.
“I think this will be an ideal factory version to
enhance the government megaproject in central Saudi Arabia”, Baeshen said.
Accordingly, both parties will perform due
diligence on the proposed transaction, as stated in a bourse filing.
Upon completion of the relevant financial
evaluation and after consideration of the due diligence, Qassim and Hail will
begin discussions on a non-binding exchange ratio.
Hail’s shareholders will receive 0.1933 newly
issued shares in Qassim for each share they own in Hail.
Based on the exchange ratio, Qassim Cement will
pay approximately 18.92 million newly issued shares of Qassim Cement to Hail
Cement's shareholders if the deal closes.
If the deal were to be completed based on the
exchange rate, then each Hail Cement share would be valued at SR14.5, which
represents a premium of 18.7 percent over the share price of Hail Cement as of
Sept. 21, 2022, according to the statement.
In case the transaction proceeds, Qassim Cement
will offer Hail Cement a share exchange offer in exchange for Hail Cement’s full
acquisition.
Hail Cement will be delisted and become a wholly
owned subsidiary of Qassim Cement, as per the merger and acquisition
regulations.
Qassim Cement will notify the relevant authorities
of any material developments relating to the transaction.