|02 September, 2019

Bahrain's AUB completes due diligence for a potential merger with KFH

The consolidation will create the largest banking entity in Kuwait with assets of about $94bln and the sixth-largest bank in the Gulf region

Traders look at the screens at Bahrain Bourse in Manama, Bahrain, February 7, 2018.

Traders look at the screens at Bahrain Bourse in Manama, Bahrain, February 7, 2018.

REUTERS/Hamad I Mohammed

Bahrain’s Ahli United Bank (AUB) has completed due diligence of Kuwait Finance House (KFH) as the Kuwaiti lender bids to take over its Shari’ah compliant Bahrain-based counterpart.

In a bourse statement, AUB said that it received the reports from specialist advisers appointed to complete the due diligence on KFH, which were submitted to the AUB board for review and evaluation, without specifying when the result of the board review is expected.

The merger is expected to boost consolidated profit by more than 90 per cent from the level in 2018.

The duo, which has been in merger talks since mid-2018, agreed on a preliminary exchange ratio of one KFH share for every 2.326 AUB shares but they have not revealed the share prices for the exchange ratio.

In August 2019, Kuwait’s Public Institute for Social Security and Wafra International Investment Company approved the potential merger, adding that Article 3 of Decision No. 5 of 2017 shall have the highest authority in determining the rules and programmes of investing the corporation’s funds and issuing the necessary investment decisions.

Kuwait’s Public Institution for Social Security owns 18.7 per cent of AUB, while the Kuwait Investment Authority holds a 24.1 per cent stake in KFH.

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