Kuwait, Bahrain Lenders Ink One of the Year’s Biggest Bank Deals.
12 July 2022, 12:00 AM
31 July 2022, 12:00 AM
Lenders in the oil-rich region started to combine locally after the twin shocks of lower energy revenues and the pandemic over the past two years, and a spate of large transactions has helped consolidate a fragmented industry.
Kuwait Finance House agreed to buy Bahrain’s Ahli United Bank for about $11.6 billion, a deal almost four years in the making and one that ranks among the banking sector’s biggest this year.
Under the revised terms, Kuwait Finance House will offer one share for every 2.695 shares of Ahli United, the Bahraini lender said. That implies an offer price of $1.04 per share -- a 13% premium to the stock’s Wednesday close.
The combination, a rare cross-border deal in the Middle East, will create the Gulf’s seventh-largest lender with $115 billion in assets.
Kuwait’s central bank, which in 2020 asked KFH to reassess the deal as the pandemic spread, approved the combination earlier on Wednesday. The initial offer in 2019 was valued at $8.8 billion, with KFH offering 1 share for every 2.32558 shares in Ahli United.
Since then, KFH shares have risen 66%, valuing the lender at $25.8 billion. Ahli United is up 27% in the same period, giving the bank a market value of $10.3 billion.
Ahli United said its board has resolved to accept the revised share swap ratio. “The acceptance of the above mentioned share exchange ratio does not imply that an official acquisition offer has been made by KFH,” it said in a statement.
The deal will help optimize costs in an increasingly competitive industry, Junaid Ansari, head of investment strategy and research at Kamco Invest said in e-mailed comments. “The combined entity is expected to provide significant geographic diversification to KFH as well as a higher participation in state projects.”