| Introduction | Further to the announcement made by The Saudi Industrial Investment Group on the Saudi Stock Exchange (the “SIIG”) on 03-02-1442H (corresponding to 20-09-2020) in respect of the approval of SIIG’s board of directors to commence the discussions with The National Petrochemical Company (“Petrochem”) on the economic feasibility of merging the businesses of the two companies (the “Proposed Transaction”) and the announcement made by SIIG on 03-09-1442H (corresponding to 15-04-2021) in respect of the latest developments on the Proposed Transaction, SIIG would like to announce that it has entered into a non-binding memorandum of understanding (the “MOU”) with Petrochem in relation to the share exchange ratio and the structure through which the Proposed Transaction would be implemented. |
| Date of signing the Memorandum of Understanding | 2021-09-27 Corresponding to 1443-02-20 |
| Memorandum Duration | Not applicable. |
| Name of the Counterparty | The National Petrochemical Company (Petrochem). |
| Name of Financial Advisor of Each Party | SIIG has appointed HSBC Saudi Arabia as its financial advisor, and Petrochem has appointed GIB Capital as its financial advisor. |
| Major Terms in the Memorandum | Pursuant to the non-binding MOU, SIIG and Petrochem have agreed on the following:- The Proposed Transaction would be implemented through a share exchange offer made by SIIG (in its capacity as the offeror) to Petrochem (in its capacity as the offeree) for the purposes of acquiring all of Petrochem’s issued shares (except for those owned by SIIG). The consideration payable by SIIG to Petrochem’s shareholders will be the issuance of new shares in SIIG in accordance with Article 26 of the Merger and Acquisition Regulations, which would result in the delisting of Petrochem’s shares, and becoming a company wholly owned by SIIG.- The Exchange Ratio for the Proposed Transaction is 1.27, pursuant to which Petrochem’s shareholders – if the Proposed Transaction is complete – will receive 1.27 shares in SIIG in exchange for each share they own in Petrochem (the “Exchange Ratio”).The Exchange Ratio was reached by the two companies after conducting due diligence reviews and financial valuation of each party. It should be noted that the MOU does not constitute a binding agreement, as the implementation of the transaction is subject to the two companies agreeing a final binding agreement that determines the terms and conditions of the transaction. The terms and conditions of the final binding agreement will include obtaining all the required regulatory approvals and the approval of the extraordinary general assembly of each company on the transaction and its related matters. SIIG will announce all the relevant details at a later stage. |
| Related Parties | The Proposed Transaction involves related parties, and a number of members of the board of directors have an interest in the Proposed Transaction. The details of this will be announced at a later stage. |
| Actions to be Taken by the Company during the Memorandum’s Duration | The parties aim to complete all the relevant requirements of the Proposed Transaction before the end of the current Gregorian year, including the execution of the definitive binding agreement and obtaining the regulatory approvals, and then present the Proposed Transaction to the shareholders of both SIIG and Petrochem in accordance with the applicable laws and regulations. |
| Approvals | The Proposed Transaction is subject to the regulatory approvals, including the approval of the extraordinary general assembly of each company. |
| Additional Information | SIIG will announce any material developments in relation to the Proposed Transaction in accordance with the applicable laws and regulations. |
