DUBAI- Shares in Saudi Arabia's Alawwal Bank soared in early trade on Wednesday in response to news on its planned merger with Saudi British Bank, while Gulf stock markets were generally soft.
The Saudi index was down 0.5 percent after an hour. But Alawwal jumped 10 percent to 13.92 riyals in its heaviest trade since April 2017, after it and SABB said they reached a preliminary, non-binding agreement to merge, creating Saudi Arabia's third-biggest bank with assets of around $77 billion.
The deal would value each Alawwal share at 16.3 dirhams, SABB said -- a big premium to the market price. SABB shares sank 4.7 percent as some investors bet the bank was overpaying.
Stocks in other Saudi banks were mixed. National Commercial Bank initially fell but then rebounded to trade flat as it went ex-dividend. The bank also announced the resignation of its chief executive, Mohammed al-Ghamdi, who will be replaced on an acting basis by Faisal Omar al-Sakkaf.
The Dubai index was down 0.5 percent as Dubai Islamic Bank dropped 1.8 percent to 4.79 dirhams. Trading of the bank’s rights issue began on Wednesday, allowing the purchase of the stock at 3.11 dirhams; the rights plunged 11.0 percent to 1.62 dirhams.
Emaar Development, which had surged on Tuesday after MSCI said it would include the stock in its United Arab Emirates index, fell back 0.7 percent.
In Abu Dhabi, where the index was down 0.2 percent, Dana Gas rose 1.9 percent after saying it received a dividend payment of $22.8 million from Pearl Petroleum Co, which produces natural gas in Iraqi Kurdistan. (Reporting by Davide Barbuscia; Editing by Andrew Torchia)
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