Public M&A

Public M&A

Public merger and acquisition transactions in the Kingdom of Saudi Arabia are governed by the CMA’s M&A Regulations. These regulations, which were updated in 2017, apply to any:

  • purchase or sale of voting shares in a Saudi-listed company resulting in ownership or control of at least 10% of the shares; or
  • offer to purchase voting shares in such a company, if the shares sought to be acquired would increase ownership to 10% or more.

The amended M&A regulations differentiate between (i) Private Transactions (a sale or purchase of voting shares in a Saudi-listed company negotiated between the offeror and selling shareholder(s) without making an Offer or involving the other shareholders or directors of the target), and (ii) general tender offers made to all holders of shares carrying voting rights in the target for the purposes of purchasing shares or effecting a merger or tender offer.

In terms of structure, the M&A Regulations follow the form seen in other developed jurisdictions, such as the UK and the US, with, for example, provisions concerning appointment of financial (and legal) advisers, responsibility for making announcements, mandatory offers in certain circumstances, restrictions on frustrating actions, and a prescribed bid timetable.

The regulations, as updated in 2017, refer for the first time to mergers (as contemplated by the Companies Law) involving public companies, and, indeed, one of the most recent and high-profile public M&A transactions involved the merger of the Saudi British Bank and Alawwal Bank.

It is expected that the rate of public M&A transactions in Saudi Arabia will accelerate given the loosening of foreign ownership restrictions, as demonstrated by the recent enactment of the Rules for Foreign Strategic Investors, which permits individual foreign ownership in Saudi-listed companies of more than 10% for the first time.

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