City Cement Co. — M&A Activity 2024

Oct 27, 2024

City Cement Co. Announces Signing an Agreement for Acquisition of Umm Al-Qura Cement Company by Increasing Capital through Issuing Shares for Umm Al-Qura Cement Company

3003 · 27/10/2024 08:10:02 · Announcement #83124 · View on Saudi Exchange

City Cement Co. Announces Signing an Agreement for Acquisition of Umm Al-Qura Cement Company by Increasing Capital through Issuing Shares for Umm Al-Qura Cement Company

Element List

Explanation

Introduction

With reference to the announcement made by City Cement Company (“CCC” or the “Company”) on the Saudi Exchange website on 12/04/1444H (corresponding to 06/11/2022G) about its entry into a nonbinding memorandum of understanding in relation to the securities exchange transaction with Umm Al- Qura Cement Company (“UACC”), the Company's supplementary announcement on the Saudi Exchange website on 06/10/1444H (Corresponding to 26/04/2023G) on the extension of a non-binding memorandum of understanding in relation to the securities exchange transaction with the UACC, the Company's supplementary announcement on the Saudi Exchange website on 07/04/1445H (Corresponding to 22/10/2023G) on the extension of a non-binding memorandum of understanding in relation to the securities exchange transaction with UACC, and the Company's supplementary announcement on the Saudi Tadawul website on 25/09/1445 AH ( Corresponding to 04/04/2024) on the extension of a non-binding memorandum of understanding in relation to the securities exchange transaction deal with UACC, CCC is pleased to announce its entry into an acquisition implementation agreement with UACC on 21/04/1446H (corresponding to 24/10/2024G) (the “Implementation Agreement”) pursuant to which CCC has agreed to make an offer to UACC’s shareholders to acquire all shares of UACC in consideration for newly issued shares in CCC pursuant to Article (26) of the Merger and Acquisition Regulations and in accordance with the Rules on the Offer of Securities and Continuing Obligations issued by the Board of the Capital Market Authority (the “CMA”), and in accordance with the conditions and provisions of the Implementation Agreement (the “Transaction”).

The Company provides further details below and in the attached document. Date of Signing the Agreement 2024-10-24 Corresponding to 1446-04-21 Name of (the Acquired Company)/(Asset to be Purchased) Umm Al-Qura Cement Company Value of (The Company to be Acquired)/(The Asset to be Purchased) Based on the Exchange Ratio and the closing share price of CCC of (18.04) SAR on 21/04/1446H (corresponding to 24/10/2024G) (which is the last trading day prior to the date of this announcement), each UACC share is valued – for the purposes of the Transaction – at (20.06) SAR and UACC’s total shares are valued – for the purposes of the Transaction – at (1,103,390,189.44) SAR. Value of the listed company The market value of CCC is (2,525,600,000) SAR as of 21/04/1446H (corresponding 24/10/2024G) (which is the last trading day prior to the date of this announcement). Capital before Increase (1,400.000,000) SAR. Number of Shares before Increase 1400000000 Value of capital increase (61,163,536) nominal shares, with total nominal value of (611,635,360) SAR. Capital Increase Percentage (%) 43.69 % Capital After Increase (2,011,635,360) SAR. Number of Shares After Increase 201163536 Share Exchange Equation (Ratio) (1.11) new share in CCC in return for every share in UACC. Potential Effects or Risks for Issuing such Shares on the Shareholders of the Current Company, the Company, and Decision Making thereon Upon Transaction completion, CCC’s existing shareholders will own (69.60%) of CCC after the capital increase, and UACC’s shareholders will own (30.40%) of CCC after the capital increase. After obtaining regulatory approvals, CCC will publish a shareholders’ circular to its shareholders with all details relating to the capital increase and associated risks. Listed Company's Ownership Percentage in (Company to be Acquired)/(Asset to be Purchased) after the Issuance of Shares (%) 100 % Ownership Percentage of Shareholders to Whom New Shares will be Issued after Conclusion of the Acquisition (%) 30.40 % Additional Information or Substantial Conditions This announcement is not meant to be a firm intention announcement by CCC for the purposes of the Merger and Acquisition Regulations issued by the Capital Market Authority’s board, as the firm intention announcement issuance is subject to certain conditions in the Implementation Agreement relating to coordination with certain regulators to confirm certain approval requirements in relation to the Transaction. The firm intention announcement will be made at a later date following the fulfilment of certain conditions of the Implementation Agreement and in any case before the publication of the Offer Document and the Shareholders’ Circular issued by CCC and the Board Circular issued by UACC.

Please review the attached file for more details about the Transaction, its terms, rationale and other details. Related Parties The Transaction involves a related party, as Al Abdullatif Holding Group Company is a related party according to the Merger and Acquisition Regulation as of the date of this announcement, where it owns )24.53% (of CCC’s capital. It is worth noting that Al Abdullatif Holding Group Company also owns (8.7%) of UACC’s capital. The expiry date of the agreement The Implementation Agreement terminates if the Transaction’s conditions are not satisfied or waived before the end of one year from the date of the Implementation Agreement (or any other date agreed in writing), and also terminates according to the below termination terms. Agreement Termination Terms The Implementation Agreement terminates with immediate effect, and the rights and obligations of both parties under it cease (with certain surviving provisions such as confidentiality, applicable law, and dispute resolution) upon the occurrence of a number of events, including:

1. If the Parties agree to terminate the Implementation Agreement in writing.

2. If the Transaction’s conditions are not satisfied or waived before the end of one year from the date of the Implementation Agreement (or any other date agreed in writing).

3. A written notice provided by either party to terminate the Implementation Agreement to the other party in the event of a breach by one party of any of the provisions of the Implementation Agreement resulting in Material Adverse Event in this context include a violation of the restrictions on the business conduct specified in the Implementation Agreement without the consent of CCC, breach of the guarantees provided or breach of the obligations contained in the Implementation Agreement to prepare and submit the documents required under the relevant regulations and to provide all the information required to enable the other party to prepare those documents. Approvals The Transaction completion is subject to a number of conditions as stated in the Implementation Agreement, which are summarized as follows:

1. Obtaining all required approvals of the CMA with respect to the Transaction.

2. Obtaining the approval of the CMA on the increase of CCC’s capital and listing of the new shares on the Saudi Exchange in relation to the Transaction, and obtaining any other approvals which the Saudi Exchange may require with respect to the Transaction.

3. Delivery of any required notification to Securities Depository Center Company (Edaa) with respect to the Transaction.

4. Obtaining a non-objection from the General Authority for Competition with respect to the Transaction, or the expiration of the applicable waiting periods under the Competition Law and its implementing regulation.

5. Obtaining a non-objection from the Ministry of Commerce in respect of the amendments to the bylaws of CCC.

6. Obtaining the approval from the CMA to publish the shareholder's circular and the offer document in relation to the Transaction.

7. Obtaining the CMA’s approval for the Extraordinary General Assembly meeting of CCC in relation to the Transaction.

8. Obtaining the CMA’s approval for the Extraordinary General Assembly meeting of UACC in relation to the Transaction.

9. Obtaining the approval of 75% of the voting rights represented at the Extraordinary General Assembly meeting of CCC in relation to the Transaction.

10. Obtaining the approval of 75% of the voting rights represented at the Extraordinary General Assembly meeting of UACC in relation to the Transaction.

11. Publication of the announcement of the results of the Extraordinary General Assembly Meeting of CCC in relation to the Transaction.

12. Publication of the announcement of the results of the Extraordinary General Assembly Meeting of UACC in relation to the Transaction.

13. No event, change or set of events or changes that have, or are reasonably expected to have, a Material Adverse Event impact on the business, assets, liabilities, financial or profit situation or future expectations of either party or on the Transaction or its implementation.

14. No breach of specific warranties provided by each CCC and UACC having occurred, unless such breach is capable of remedy and has been remedied to the reasonable satisfaction of the non-breaching party as stated in the Implementation Agreement.

15. No decision, order, instruction, judgement or decree from any government entity or authority in the Kingdom makes the completion of the Transaction illegal.

16. Obtaining the approval of a number of contractual counterparties of both companies as outlined in the Implementation Agreement. Attached Documents  

The Capital Market Authority and Saudi Exchange take no responsibility for the contents of this disclosure, make no representations as to its accuracy or completeness, and expressly disclaim any liability whatsoever for any loss arising from, or incurred in reliance upon, any part of this disclosure, and the issuer accepts full responsibility for the accuracy of the information contained in it and confirms, having made all reasonable enquiries, that to the best of their knowledge and belief, there are no other facts or information the omission of which would make the disclosure misleading, incomplete or inaccurate.