Kuwait’s KFH to buy Bahrain’s Ahli United in $11.6bn deal

The potential combination would create the Gulf’s seventh-largest lender with $115bn in assets

12/07/09 - Kuwait City, Kuwait - Kuwait Finance House (KFH) was established in the State of Kuwait in 1977, as the first bank operating in accordance with the Islamic Shari'a.  (Andrew Henderson/The National) *** Local Caption ***  ah_090712_Kuwait_Stock_0092.jpg
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Kuwait Finance House has received the approval of the Central Bank of Kuwait to buy Bahrain’s Ahli United in one of the biggest deals in the banking sector this year, the bank said in a disclosure on Wednesday.

The deal, which is in the making for almost four years, is valued at $11.6 billion, according to a Bloomberg report. The lender, however, did not disclose the total value of the deal.

"KFH has received approval of the Central Bank of Kuwait to acquire 100 per cent of the capital shares of Ahli United Bank," the disclosure said.

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 per cent premium to the stock’s Wednesday close. The initial offer in 2019 was valued at $8.8bn, with KFH offering 1 share for every 2.32558 shares in Ahli.

The potential combination would create the Gulf’s seventh-largest lender with $115bn in assets, the Bloomberg report said.

Other big deals in the banking sector in the last two years include the merger of Saudi Arabia’s biggest retail lender National Commercial Bank and smaller rival Samba Financial Group to create the kingdom’s biggest bank last year.

Dubai Islamic Bank also completed its acquisition of competitor Noor Bank to create one of the largest Islamic banks in the world, with total assets of more than Dh275bn ($74.88bn) in 2020.

Last month, First Abu Dhabi Bank completed the merger of Bank Audi Egypt with its Egyptian operations, consolidating its market position in the most populous Arab country.

KFH reported a 39 per cent jump in its first-quarter profit as investment income rose and impairments fell amid the Gulf country’s economic recovery from the coronavirus pandemic.

Profit attributable to shareholders of the bank for the three-month period to the end of March climbed to 69.5 million Kuwaiti dinars ($226.02m).

Investment income rose more than three fold to 11.8m dinars, while provisions and impairment fell 28 per cent to 40.4m dinars.

Updated: July 07, 2022, 11:34 AM