GFH confirms it has withdrawn from talks to buy Shuaa Capital

GFH Financial Group says it postpones talks to acquire Shuaa Capital after they could not reach an agreement over price

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GFH, the Bahraini Sharia-compliant investment firm, said yesterday in a clarification to the Bahrain stock market that it was postponing discussions to acquire the Dubai-based investment bank Shuaa Capital after an agreement over the terms of the acquisition could not be reached.

“GFH confirms to its shareholders and the markets that the withdrawal was [a] result due to both parties not reaching agreed acquisition terms and not receiving initial regulatory approval yet,” Nabeel Mirza, the senior director for compliance at GFH was quoted as saying in the statement filed with the Bahrain Stock Exchange.

“Therefore, both parties have agreed to postpone the discussions regarding the acquisition for the time being.”

GFH said it would still be on the hunt for an acquisition of a financial institution as part of its efforts to diversify business lines and push for growth.

Shuaa Capital declined to comment.

On Sunday, a shorter statement was posted on the Bahrain Stock Exchange website saying that GFH was withdrawing from the discussions to acquire Shuaa. It did not include the line saying that it had left the door open to resume them at a later point down the road. The statement was later removed from the website without explanation.

Shares of Shuaa Capital closed 5.3 per cent lower to Dh1.43, while shares of GFH declined 4.7 per cent to Dh2.25 on the Dubai stock market yesterday. GFH, which is listed in Dubai and Bahrain, had made an announcement on March 14 confirming that it is in talks with several financial institutions for potential mergers and acquisitions, including Shuaa.

Shuaa Capital had also confirmed on March 16 that it had held discussions with GFH with a view to the Bahraini Islamic investment group acquiring a majority stake in its business.

The Abu Dhabi Financial Group, an alternative investment company with US$5 billion in assets, is the largest shareholder in both Shuaa and GFH.

Shuaa Capital, which is in the midst of restructuring its business, said in April that it recorded its first profit in seven quarters thanks to a reduction in money set aside to cover bad debt at its SME financing unit as well as cost-cutting.

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