Gulf Training & Education and GFH Financial Group Explore Major Education Sector Merger
Table of Contents
A potential consolidation could create one of Saudi Arabia’s largest educational organizations.
Gulf Training & Education Company and GFH Financial Group have signed a non-binding memorandum of understanding (MOU) to explore a merger of their respective basic education assets. The proposed deal, announced via a statement on Tadawul, aims to integrate the companies’ holdings through a 100% in-kind share exchange. This move signals a significant development in the regional education landscape and could reshape the competitive dynamics of the sector.
Exploring a Regional Education Powerhouse
The potential merger envisions combining Gulf Training & Education’s 13 schools – located in Riyadh, Dammam, Jeddah, Al-Khobar, Dhahran, and Al-Ahsa – with GFH Financial Group’s portfolio of 10 schools and universities across Saudi Arabia, Bahrain, the United Arab Emirates, and Tunisia. According to a company release, the combined entity could serve approximately 25,000 students.
“This merger aims to establish a new entity…for the purpose of listing it in the Saudi financial market (Tadawul),” a senior official stated. The anticipated timeline for listing is 24 to 36 months following the completion of the deal and receipt of necessary regulatory approvals from the Capital Market Authority and other relevant bodies.
Deal Structure and Key Conditions
The MOU, valid for six Gregorian months with potential for extension, outlines a framework for due diligence and negotiation. While not legally binding regarding the transaction’s implementation, the agreement is binding in terms of maintaining confidentiality.
Ownership percentages in the new entity will be determined following a comprehensive evaluation process utilizing multiple valuation methods. “The ownership percentages in the new entity are determined based on the final agreed-upon evaluation using multiple evaluation methods and after the completion of the due diligence examination,” the statement clarified.
The proposed structure involves establishing either a Saudi joint stock company or an educational fund.
Next Steps and Financial Implications
Gulf Training & Education will undertake several key measures during the MOU’s term, including:
- Conducting thorough financial and legal evaluations and due diligence examinations.
- Appointing independent legal, tax, and financial advisors, alongside a certified evaluator, in collaboration with GFH Financial Group.
- Completing the necessary studies, negotiations, and securing approvals to finalize the deal agreements.
Currently, the MOU has no financial impact, and the companies have confirmed there are no related parties involved in the transaction.
This potential merger represents a strategic move for both Gulf Training & Education and GFH Financial Group, positioning them to capitalize on the growing demand for quality education in the region and potentially unlock significant value through a public listing on the Tadawul exchange.
