Saudi Arabia-based Buruj Cooperative Insurance has reached a binding merger agreement with local peer Mediterranean and Gulf Insurance and Reinsurance (Medgulf).

The agreement comes after the two insurers signed a memorandum of understanding in July 2024.

The merger will involve the integration of Buruj into Medgulf, resulting in the transfer of Buruj’s rights, liabilities, assets and contracts to Medgulf.

In exchange, Medgulf will issue 33,157,894 ordinary shares, each with a nominal value of SR10, to Buruj’s shareholders.

This will result in an increase in Medgulf’s capital from SR1.05bn ($279m) to SR1.38bn and an increase in the number of Medgulf’s shares from 105 million to 138 million, representing a capital increase of 31.58%.

Each Buruj share is valued at approximately SR19.49 for the merger, leading to a total valuation of Buruj’s shares at around SR585m.

After the merger resolution is issued and the consideration shares are deposited, Medgulf’s existing shareholders will hold approximately 76% of the company’s capital, while Buruj’s shareholders will hold 24%.

Key shareholders in Medgulf post-merger will include the Saudi Investment Bank (14.44%), Rakan Abdullah Rashed Abunayyan (9.16%), Medgulf (Bahrain) (8.68%) and Cigalah Multi-Industries Company (6.84%).

Additionally, Yasser Yousef Naghi, a significant shareholder in Buruj and its board chairman, will own 2.76% directly and 9.24% indirectly through controlled entities, totalling approximately 12%.

In January 2025, Buruj received a non-objection ruling from the General Authority for Competition regarding the merger’s economic concentration.