Elm nears full control of Thiqah: Tadawul-listed digital IT solutions firm Elm inked a SAR 3.4 bn cash-based share purchase agreement (SPA) with its parent company the Public Investment Fund (PIF) to acquire 100% of business services firm Thiqah, according to a joint press release. This is a related-party transaction given that the PIF is a majority shareholder in both Elm and Thiqah. The story was picked up by Reuters.

Transaction mechanism: The acquisition will see Elm buy all 45k shares held by the PIF in Thiqah, valued at a nominal share price of SAR 1k a piece, it said in a filing to Tadawul. The digital security firm will tap its own resources and facilities to fund the transaction fully in-cash. Upon closing, Thiqah will become a wholly-owned subsidiary of Elm and its financial results will be consolidated into Elm’s financials.

The pitch: “The combined integrated entity will be better able to create advanced national smart services to serve market requirements and clients’ needs. It will also contribute to facilitating innovative operations and capabilities to develop products in the business field with cost advantages while achieving economies of scale,” Elm’s CEO Mohammad Abdulaziz Alomair said.

This has been brewing for months: Discussions on the potential acquisition initially kicked off in 2023. Alomair later confirmed that “the talks are moving in a good direction,” in an interview with Al Arabiya back in March 2024.

About Thiqah: Established in 2012, the PIF company is an end-to-end business services and digital solutions provider, according to its webpage. The company’s portfolio includes a wide range of platforms and services, such as product conformity platform Saber, digital tool for financial transparency Etimad, marriage e-certificate service E-Zawaj, legal authentication platform Almwathiq, online auction solution E-Mazad, and cultural licensing platform Ebdea. Additionally, it offers Aamaly for publishing government transactions, Wathq for direct data verification, and SDR for pharmaceutical and veterinary product registration, among others.

A quick look at 2023 earnings: Thiqah logged SAR 180 mn in net income in 2023, up from SAR 129 mn in 2022, according to the filing. The company’s revenues came in at nearly SAR 1.6 bn over the same period, slightly down from SAR 1.7 bn the previous year.

ADVISORS- Our friends at HSBC Saudi Arabia were appointed as financial adviser to Elm on the transaction, while AS&H Clifford Chance Law Firm provided counsel.

Market Reax: Elm’s share price fell 4% to SAR 1.18k apiece at market close yesterday.

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