National Bank of Bahrain (NBB) has disclosed the price it is offering to acquire a majority stake in Bahrain Islamic Bank (BisB).
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In a statement to Bahrain Bourse (BHB), the conventional lender said it is offering the shareholders of BisB either 117 fils per share for outright purchase or a share-swap in the ratio of 0.167 shares of NBB for each BisB share (in other words 167 shares of NBB for 1,000 shares of BisB).
The announcement comes about a year after NBB first announced it was considering buying shares in Bahrain’s largest Sharia-compliant lender.
The offer price was determined based on financial and non-financial information provided by BisB during the due diligence exercise, NBB said.
An expert said, through the deal NBB is looking to get an entry into the promising Islamic banking sector of Bahrain.
He expects BisB to become a fully-owned subsidiary of NBB, with the two continuing to exist as independent listed entities.
According to him, the share-swap offer is beneficial for the shareholders of BisB, which has a price to earnings ratio (PE ratio) of 11.26, whereas NBB’s PE ratio is 14.16.
In the event that it acquires 95pc of BisB shares in the voluntary offer, NBB shall be required to make a compulsory offer to acquire the remaining shares within three months.
The cash element of the offer will be financed through internal accruals, whereas the share exchange element will be financed through an issue of up to 145 million new shares to be approved by shareholders during an extraordinary meeting on November 24.
According to Reuters data, NBB is the second largest Bahraini bank by market capitalisation, while BisB is the eighth largest.
The share issuance will increase NBB’s issued and paid-up capital from BD154,329,258 to BD168,829,258.
Bahrain’s sovereign wealth fund Mumtalakat holds 44.18pc of NBB’s share capital and Social Insurance Organisation holds 10.88pc.
The Islamic lender has an issued and paid-up capital of BD106,405,858.
In 2013, NBB and SIO Asset Management Company, the investment arm of the Social Insurance Organisation, together bought 51.6pc stake in BisB from its Kuwaiti owners.
They each took a 25.8pc stake in a deal valued at about BD34.9m.
NBB has reported a 1.8pc YoY increase in net profit at BD56m for the nine months till September-end.
Trading in BisB shares on BHB was suspended yesterday pending material information. Its share price closed at 0.122 fils on Sunday.
The Central Bank of Bahrain (CBB) has been encouraging mergers and acquisitions in Bahrain’s banking industry to strengthen their operational base through effective use of capital, human resources and liquidity.
CBB Governor Rasheed Al Maraj told the GDN on the sidelines of the 14th AAOIFI-World Bank Conference on Sunday that the country’s Islamic lenders needed to consolidate as their relatively smaller size in comparison to conventional rivals limited their competitiveness.
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