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 would rank among the banking sector’s biggest of the year.
The combination, a rare cross-border deal in the Middle East, would create the Gulf’s seventh-largest lender with $115 billion in assets. Under the revised terms, Kuwait Finance House will offer one share for every 2.695 shares of Ahli United, implying an offer price of $1.04 per share - a 13 per cent premium to the stock’s Wednesday close.
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 per cent, valuing the lender at $25.8 billion. Ahli United is up 27 per cent 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.
Lenders in the oil-rich region are starting to combine locally after the twin shocks of lower energy revenues and the pandemic, and a spate of large transactions has helped consolidate a fragmented industry.
Masraf Al Rayan QSC and Al Khalij Commercial Bank PQSC agreed to combine last year, creating one of Qatar’s largest lenders, while Saudi Arabia’s National Commercial Bank bought Samba Financial Group in one of the biggest banking takeovers of 2020.
HSBC Holdings Plc and Credit Suisse Group AG have been the advisers on the KFH deal.
