Elm Company announces the signing of a Share Purchase Agreement for the acquisition of the entire shareholding of the Public Investment Fund in Thiqah Business Services Company for an amount of SAR 3,400,000,000
| Element List | Explanation |
|---|---|
| Transaction Details | Further to Elm Company's announcement on Tadawul dated 16/11/1444H (corresponding to 05/06/2023G) in relation to the start of preliminary discussions with Thiqah Business Services Company ("Thiqah") regarding the proposed transaction of acquiring 100% of the shares in Thiqah which are owned by the Public Investment Fund (the "PIF") by Elm Company, Elm Company announce the signing of a share purchase agreement on 21/07/1446H (corresponding to 21/01/2025G) (the "SPA") with the PIF, for the purpose of acquiring the entire shares held by the PIF in Thiqah, in the amount of (45,000) shares with a nominal value of SAR (1,000) per share, representing 100% of the entire issued share capital of Thiqah (the "Target Shares") (the "Acquisition"). |
| Transaction Amount | In accordance with the SPA terms, the consideration for the Acquisition will be a cash amount of SAR 3,400,000,000 (less an amount equal to certain costs related to the transaction, fees and payments as agreed in the SPA) paid by Elm Company to the PIF. |
| Transaction Conditions | The SPA includes customary terms and conditions and fundamental warranties given by each party as is customary. The completion of the Acquisition will be subject to obtaining the relevant regulatory approvals. The completion of the Acquisition will also be subject to obtaining the authorization of the ordinary general assembly of Elm Company, pursuant to Articles 27 and 71 of the Companies Law, due to the indirect interest of the members of the Board of Directors, Mr. Raed Ismail, being a senior employee at PIF and Mr. Abdullah Al-Salem, being a board member in Thiqah, and the satisfaction of other approvals and conditions, in accordance with the SPA. |
| Parties of the Transaction | 1. Elm Company
2. Public Investment Fund (PIF). |
| Transaction Financing Method | Elm Company will fund the consideration fully in cash through Elm Company's own resources and facilities. |
| Date of Entering Into The Transaction | 2025-01-21 Corresponding to 1446-07-21 |
| Description of Activity of The Asset Subject of The Transaction | Thiqah is a leading end to end digital solutions offering a wide range of smart solutions based on customized and ready-made digital platforms. |
| Financial Statements for the Last Three Years of the Asset forming the Subject Matter of the Transaction | Thiqah’s revenues:
For 2021G: SAR 1,577 million For 2022G: SAR 1,710 million For 2023G: SAR 1,576 million Thiqah’s net profit: For 2021G: SAR 112 million For 2022G: SAR 129 million For 2023G: SAR 180 million |
| Transaction reasons | The Acquisition supports Elm’s growth ambitions and will reinforce its position as a national provider in the digital services space. It is expected that the Acquisition will result in value creation and is expected to result in continued growth by accessing high growth accounts allowing Elm Company to offer complimentary services to its client base. |
| Expected Impact of the Transaction on the Company and Its Operations | At completion of the Acquisition, Thiqah will be wholly-owned by Elm Company, and will allow Elm Company to offer complementary services to its client base and this is expected to have a positive impact in the future. The financial statements of Thiqah will be consolidated within Elm’s financial statements post transaction. In addition, and given that the Acquisition is classified as a transaction between parties under common control, the accounting treatment of the Acquisition will be based on the value of the net asset acquired at its book value as of the Acquisition date and the difference between the consideration paid and the book value will be treated in the retained earnings account, which will result in a decrease in the retained earnings account by the value of that difference and will be reflected in Elm Company’s first financial statements after the completion of the Acquisition. This is based on the International Financial Reporting Standards that are endorsed in the Kingdom of Saudi Arabia and other standards and pronouncements issued by the Saudi Organization for Chartered and Professional Accountants (SOCPA). This procedure is of an accounting nature, and does not have any impact on Elm Company’s business plans. |
| Related Parties | The PIF is a substantial shareholder in Elm Company.
The members of the Board of Directors, Mr. Raed Ismail and Mr. Abdullah Al-Salem, also have an indirect interest in the Acquisition. |
| Additional Information | Elm Company will announce any material developments in respect of the Acquisition, as required in accordance with the relevant rules and regulations.
Elm Company has appointed HSBC Saudi Arabia as the Financial Adviser in relation to the Acquisition, and AS&H Clifford Chance Law Firm as the Legal Adviser in relation to the Acquisition. |
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