Latest $11.6bn bank merger to create Gulf’s 7th largest lender

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Kuwait Finance House (KFH) has agreed to buy Bahrain’s Ahli United for about $11.6billion.

The bumper deal would create the Gulf’s seventh-largest lender with $115 billion in assets.

Under the revised terms, KFH will offer one share for every 2.695 shares of Ahli, implying an offer price of $1.04 per share – a 13 percent premium to the stock’s Wednesday close.

The initial offer in 2019 was valued at $8.8 billion, with KFH offering 1 share for every 2.32558 shares in Ahli.

Since then, KFH shares have risen 66 percent, valuing the lender at $25.8 billion. Ahli has increased 27 percent in the same period, giving the bank a market value of $10.3 billion.

In a statement on the Bahrain stock exchange on Wednesday, AUB said its board had “resolved to accept the” proposed acquisition by KFH.

Kuwait’s central bank approved the merger on Wednesday, further evidence of an ongoing trend for bank mergers in the Gulf, as lenders react to the tightening economic conditions in a post-pandemic environment, and the rise digital banks.

Masraf Al Rayan and Al Khalij Commercial Bank agreed to combine last year, while Saudi Arabia’s National Commercial Bank bought Samba Financial Group in 2020.

Last month, HSBC Bank Oman said it would hold preliminary talks with local rival Sohar International Bank for a potential merger.