Kuwait Finance House (KFH) has agreed to purchase Bahrain’s Ahli United Bank for about USD 11.6 billion. The deal comes as a success almost after four years of trials and tribulations. The agreement ranks amongst the biggest of its kind this year in the banking sector. The acquisition would effectively make the firm the Arabian Gulf’s seventh-largest lender with USD 115 billion in assets.
According to the revision of the original stock pricing, Kuwait Finance House will offer one share for every 2.695 shares of Ahli United. This implies that an offer price of USD 1.04 will be allotted per share.
In 2019 when the acquisition was first announced, the value of the transaction was positioned at USD 8.8 billion. In the following year, the pandemic harrowed global economies with Kuwait’s central bank asking KFH to reassess the deal.
Mergers and acquisitions in the Middle East’s banking sector have gained traction in the recent times, largely powered by economic pressure due to lower energy revenues and the impact of the pandemic.
The approved purchase directed the shares to increase by 66%, valuing the lender at USD 25.8 billion. During the same period, Ahli United shares surged to 27%, giving the bank a market worth of USD 10.3 billion.
A statement released by Ahli United indicated that the board was determined to accept the revised share swap ratio. Furthermore, it stated that the acceptance of the above-mentioned stake exchange ratio does not infer that an official acquisition offer has been made by Kuwait Finance House.
Junaid Ansari, Head of Investment Strategy and Research at Kamco Invest, indicated in his comments via e-mail that the deal will help enhance costs in an increasingly competitive business. The merged entity is projected to provide significant geographic diversification to Kuwait Finance House as well as a higher participation in state projects.
Masraf Al Rayan QSC and Al Khalij Commercial Bank PQSC associated with each other last year and formed one of Qatar’s largest lenders. Furthermore, in one of the biggest banking takeovers of 2020, Saudi Arabia’s National Commercial Bank bought Samba Financial Group.
Citigroup Inc. is advising Ahli United. HSBC Holdings Plc and Credit Suisse Group AG have also previously been consultants to both the companies.
About Kuwait Finance House
Kuwait Finance House (KFH) is considered a pioneer in the banking spectacle known as Islamic Finance or Shari’a Compliant Banking. Established in 1977, KFH is the foremost Islamic bank in the State of Kuwait. Today the finance mogul is one of the foremost Islamic financial institutions in the world.
KFH has progressively managed to expand its business and accomplishments to guide the Islamic banking industry.
KFH aims at becoming a forerunner in the financial establishment, not only in the Islamic banking industry, but also in the banking sector as a whole. The firm strives to emerge as one of the biggest lenders in the local and regional markets.
KFH’s largest shareholders include, Kuwait Investment Authority (Direct), Kuwait Awqaf Public Foundation (Direct), The Public Institution for Social Security (Indirect), Public Authority for Minors’ Affairs (Direct), as of 31st December 2014.
KFH is a publicly listed company at the Kuwait Stock Exchange (KSE). KFH offers all-inclusive banking and Shari’a compliant products and services, comprising of trade finance, investment portfolios, real estate, commercial, retail, and corporate banking. KFH is accessible in Kuwait, the Kingdom of Bahrain, the Kingdom of Saudi Arabia, the United Arab Emirates, Turkey, Malaysia, and Germany.