The merger will involve a share swap, whereby shareholders of Watania, now listed on the Abu Dhabi Securities Exchange, will receive shares in DAT, which will represent the combined entity that will continue to be listed on the Dubai Financial Market.
Shareholders of two of the UAE’s largest Islamic insurance companies, Dubai-based Dar Al Takaful (DAT) and Abu Dhabi-based Watania, have voted in favor of a merger that will result in the creation of the UAE’s largest Islamic insurance (Takaful) provider, by market share.
The merger is expected to unlock value for all stakeholders, as a result of considerable cost and revenue synergies. With optimized sales channels, the merger will also result in reduced operating expenses and enhanced IT platforms.
Based on the proposed structure, the merger will involve a share swap, whereby shareholders of Watania, now listed on the Abu Dhabi Securities Exchange, will receive shares in DAT, which would be the remaining entity that will continue to be listed on Dubai Financial Market.
The chairman of DAT, Matar Hamdan Sultan Hamad Al Ameri, said: “The proposed merger would bring new energy and dynamism into the UAE fragmented Takaful market. DAT and Watania would build great synergies together, acting as an Islamic insurance powerhouse for the benefit of policyholders, shareholders, and other stakeholders.”
Under the terms of the merger, Watania shareholders would receive 0.734375 DAT shares for every Watania share that they own, valuing the merged company at AED 260,156,250 million.
All DAT and Watania policies would be held by two DAT subsidiaries: Noor Takaful Family and Noor Takaful General, with DAT being the holding company that owns the two entities.
Al Ameri added: “The transaction would enable DAT to expand not only within the UAE but potentially across the region, fulfilling a core objective of takaful by broadening its base of policyholders and supporting profitability in the pool. The merger would also support the UAE’s expanding role as a global leader in Islamic finance.”
The combined entity would be strongly positioned to expand its product offerings, and geographical footprint whilst offering competitive terms to policyholders, along with improved customer service, backed by the ability and ambition to invest in new ideas and technologies.
The chairman of Watania, Dr. Ali Saeed Bin Harmal Aldhaheri, said: “This compelling strategic transaction would allow DAT to leverage its scale as a takaful champion to further develop new and innovative insurance offerings, meeting the ever-changing needs of the market and the public’s requirements for flexible and imaginative Takaful solutions.
“Our enhanced financial base and the substantial revenue and cost synergies expected to arise from the merger would enable us to offer reliable and more comprehensive coverage with terms that are highly favorable for policyholders and to create substantial long-term value to our shareholders.”
The integration process of Dar Al Takaful and Watania
The new entity would benefit from many cross-selling opportunities through the increased geographic reach, as well as through capitalizing on larger underwriting capacity, to negotiate improved terms with reinsurers.
The integration process is currently being rigorously managed by a merger committee, comprising board members of both DAT and Watania, which continues to collaborate with independent valuation and financial advisors to arrive at beneficial and equitable terms for all parties.
The process would include the seamless transfer of policies to the Noor subsidiaries, whilst efficiently integrating the functions, systems, processes, policies, and procedures, in order to establish an optimal operating model for the combined entity.
The proposed chairman of DAT after the completion of the merger would be Dr Ali Saeed Bin Harmal Aldhaheri and the vice-chairman would be Matar Hamdan Sultan Hamad Al Ameri. Meanwhile, Gautam Datta would remain the chief executive officer of DAT.
The merger proposal has received approval from 100 percent of DAT shareholders and 99.9 percent of Watania shareholders at the Annual General Meetings of both companies.
Following shareholders’ approval, the creditor will have a 30-day objection period and policyholders will have a 45-day notice period.
Preliminary regulatory approvals have already been obtained and following the shareholders’ approval, the merger will be subject to final approvals from the Central Bank, the UAE insurance regulator, and SCA, the regulator of listed companies.
DAT and Watania are well-positioned to meet all regulatory requirements. The merger is expected to be complete by end-June 2022.