Oman International Marketing Company (OIM) will merge with Al Madina Financial and Investment Services (AMFIS) after the OIM board approved the move on August 1.
Although both companies said they were unable to comment on the merger until the process is over, analysts believe the move could be driven by the desire to consolidate as both companies have a common shareholder in Transgulf International Holdings, which holds a 19.64 per cent stake in OIM and a 20 per cent stake in AMFIS.
In a statement to the Muscat Securities Market, OIM, which is into computer hardware sales, said that its board had "authorised the management to carry out the necessary formalities with all concerned authorities."
Kanaga Sundar, analyst with Gulf Baader Capital Markets, believes the merger could help both companies save on costs and allow the new business to grow.
"They might have thought it would be better to merge, as there probably is a cost benefit. I think consolidation may be the main purpose of the merger."
Anil Kumar, vice president of research at Fincorp, added that the merger could well be the result of a Transgulf decision to consolidate OIM, which has been making losses, with a stronger AMFIS.
"In terms of business models, they are quite different from each other. AMFIS is into brokerage and manages its own funds, whereas OIM deals in the trading of hardware like computers. So in terms of business models, there is no synergy.
"From a business point of view, I do not think it makes much sense, but they have common investors."
© Muscat Daily 2011
