Kuwait lender KFH to buy Bahrain’s Ahli United for $11.6bn

Kuwait Finance House (KFH) agreed to buy Bahrain’s Ahli United for about $11.6bn, a deal almost four years in the making and one that would rank among the banking sector’s biggest of the year.

The potential combination, a rare cross border deal in the Middle East, would create the Gulf’s seventh-largest lender with $115bn in assets. 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.

Kuwait’s central bank, which in 2020 asked KFH to reassess the deal as the pandemic spread, approved the combination on Wednesday. The initial offer in 2019 was valued at $8.8bn, with KFH offering 1 share for every 2.32558 shares in Ahli.

Since then, Kuwait Finance House shares have risen 66 per cent, valuing the lender at $25.8bn. Ahli is up 27 per cent in the same period, giving the bank a market value of $10.3bn.

Lenders in the oil-rich region are starting to combine locally after the twin shocks of lower energy revenues and the pandemic, and a spate of large transactions has helped consolidate a fragmented industry.

Masraf Al Rayan and Al Khalij Commercial Bank agreed to combine last year, creating one of Qatar’s largest lenders, while Saudi Arabia’s National Commercial Bank bought Samba Financial Group in one of the biggest banking takeovers of 2020.

HSBC Holdings and Credit Suisse Group have been the advisers on the KFH deal.