Doha: Gulf International Service Q.P.S.C. (“GIS”; QE Ticker: GISS), one of the region’s largest oil and gas service providers, announced yesterday that the Company’s Board of Directors during its meeting on February 13 has approved to call for the Extra-Ordinary General Assembly Meeting (“EGM”) scheduled for March 13 to obtain the shareholders’ approval of the Merger.
The proposed Merger of Amwaj Catering Services Limited (“Amwaj”), a wholly owned subsidiary of GIS, with selected entities of Shaqab Abela Catering Serivces Co. (“Shaqab”) and Atyab Fruits and Vegetables (“Atyab”) is intended to be effective from 1st January 2023.
The Merger is an all-share combination of Amwaj with in-kind contribution from two new incumbent strategic merging shareholders (who are currently 100 percent joint owners of Shaqab & Atyab) namely – Tamween Capital W.L.L. (“Tamween”) and Abela Qatar International W.L.L. (“AQI”).
New strategic shareholders of Amwaj along with GIS have jointly agreed to make the Merger’s effective date as the 1st January, 2023 and will enter into definitive shareholders agreement alongside appropriate regulatory approvals.
II. Merger Overview a) Key Purpose of the Merger
- The Merger will create a catering national champion, and the combined entity will become the go-to player for all large-scale catering needs in Qatar and, potentially, in the wider region.
- The Merger will combine Amwaj’s solid brand and strong client base with the incumbent shareholders’ best-in-class management capabilities and proven track record.
b) SWOT Analysis of the Merger Strengths: Weaknesses:
- Ability to provide an integrated and diversified range of services to support corporate businesses in Qatar and critical energy sector offshore locations
- Ability to fully serve major contracts within Qatar and the region on the back of the wider and integrated structure
- Ability to increase operational efficiencies on the back of the achievement of larger economies of scale
- Best-in-class operator with strong track record and solid shareholder backing
- Proven management & Board expertise to achieve desired growth
- Benefit of the presence of three shareholders with similar ownership allowing deadlocks to be avoided thanks to clearly defined rules in the shareholders agreement
- Revenue concentration on the oil & gas segment
- Reliance on mostly short to medium-term contracts, with potential renewal risk
- Potential impact on financial for operating in a high-inflation environment
Opportunities: Threats:
- Explore untapped and unaccounted revenue and cost synergies, once integration is completed
- Explore additional acquisitions to consolidate a highly fragmented market.
