Qassim Cement Company (“Qassim Cement”) announces that it entered into a non-binding memorandum of understanding (“MOU”) with Hail Cement Company (“Hail Cement”) pursuant to which the two companies agreed to commence discussions in relation to a securities exchange transaction pursuant to which Qassim Cement will acquire all issued shares in Hail Cement (the “Proposed Transaction”). On this basis, Qassim Cement and Hail Cement have agreed to proceed with relevant due diligence in relation to the Proposed Transaction.

Subject to the satisfactory completion of financial evaluation of the Proposed Transaction and the results of the relevant due diligence exercise, Qassim Cement and Hail Cement will proceed with discussions in the context of a non-binding exchange ratio where the shareholders of Hail Cement will receive 0.1933 newly issued shares in Qassim Cement for every share they own in Hail Cement (the “Exchange Ratio”).

The total consideration payable by Qassim Cement to Hail Cement’s shareholders, should the Proposed Transaction complete based on the Exchange Ratio, will be approximately 18,924,070 newly issued shares in Qassim Cement. At a closing share price of SAR 75 per Qassim Cement share on 21-09-2022G, the Proposed Transaction, if completed based on the Exchange Ratio, would value each Hail Cement share at SAR 14.5, which represents a premium of 18.7% to the Hail Cement share price as of 21-09-2022G.

Date of signing the Memorandum of Understanding:
2022-09-25 Corresponding to 1444-02-29

Memorandum Duration:
Not applicable

Name of the Counterparty:
Hail Cement Company

Name of Financial Advisor of Each Party:
No financial advisor has been appointed at this stage. Qassim Cement Company will later announce any developments about the appointment of its financial advisor.

Major Terms in the Memorandum
Pursuant to the non-binding MOU, Qassim Cement and Hail Cement have agreed on the following:

- The Proposed Transaction, should it proceed, will be implemented through a share exchange offer made by Qassim Cement (in its capacity as the offeror) to Hail Cement (in its capacity as the offeree) for the purposes of acquiring all of Hail Cement’s issued shares (except for those owned by Qassim Cement). The consideration payable by Qassim Cement to Hail Cement’s shareholders will be the issuance of new shares in Qassim Cement in accordance with Article 26 of the Merger and Acquisition Regulations, which would result in the delisting of Hail Cement’s shares, and becoming a company wholly owned by Qassim Cement.

- Subject to the satisfactory completion of financial evaluation of the Proposed Transaction and the results of the relevant due diligence exercise, Qassim Cement and Hail Cement will proceed with discussions in the context of a non-binding exchange ratio where the shareholders of Hail Cement will receive 0.1933 newly issued shares in Qassim Cement for every share they own in Hail Cement. The final exchange ratio will be set out in the definitive agreements of the Proposed Transaction.

It should be noted that the MOU does not constitute a binding agreement to implement the Proposed Transaction, as the implementation of the transaction is subject to the Qassim Cement and Hail Cement agreeing a final definitive agreement that determines the terms and conditions of the transaction. The terms and conditions of the final definitive agreement will include obtaining all the required regulatory approvals and the approval of each respective extraordinary general assembly of Qassim Cement and Hail Cement on the transaction and its related matters. Qassim Cement will announce all the relevant details at a later stage.

Related Parties:
The Proposed Transaction may possibly involve related parties, and a number of members of the board of directors may 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 intend to conclude the due diligence process and sign the definitive agreements in relation to the Proposed Transaction, if they agree to their final terms, as soon as practicable.

Approvals:
The Proposed Transaction is subject to the regulatory approvals, including approvals from the competent authorities and the approval of the extraordinary general assembly of each company.

Additional Information:
Qassim Cement will announce any material developments in relation to the Proposed Transaction in accordance with the applicable laws and regulations.