Talk on mergers rampant ... could lead to huge financial entities
KUWAIT CITY, May 7: The economic circles in Kuwait are busy talking about mergers to be implemented in the coming period, which will lead to the formation of many financially and economically huge entities at the banking, investment and real estate levels, and within the telecommunications sector, reports Al-Rai daily.
The expected deals coincide with the gradual recovery of economic activity in Kuwait after two years of suffering due to the “Corona” crisis, which led to a near-total closure of various economic sectors in the country, for a period considered the longest among all countries in the world.
Highlights on the list of operations is the acquisition deal between “Kuwait Finance House” (KFH) and Ahli United Bank-Bahrain, which is considered one of the most important prospective deals, which will lead to the establishment of a huge Islamic banking entity.
In the recent period, many disclosures emerged between the two sides of the deal, the latest of which is that the specialized advisors who were appointed by the board of directors of “KFH” and “Ahli United” have completed the due diligence study and submitted their reports to the two banks’ boards of directors for consideration and evaluation, after agreeing to update them and the resumption of related procedures after stopping them in the last two years due to the “Corona” pandemic.
KFH also informed the Board of Directors of Al Ahli United Bank that an updated share exchange rate conditional on completing approvals from both shareholders and regulatory authorities, while the two banks are discussing the proposed share exchange rate and possible alternatives.
On the other hand, the merger deal between the Kuwait Projects Company Holding Company “KIPCO” and the Qurain Petrochemical Industries Company “Al-Qurain” is cooking up on a quiet fire, as the two companies signed a memorandum of understanding according to which it was agreed to evaluate the merger offer, which will lead to the formation of an investment holding company that will be among the largest in the Middle East and North Africa region, with assets amounting to 10.86 billion dinars, according to the latest financial data disclosed by the two companies.
Entity
The merged entity will benefit from a balanced and diversified portfolio of assets, to be the first company to achieve integration in its investment portfolio locally, as it will include petroleum chemicals and oil services, in addition to banking, foodstuffs, insurance, industry, real estate, media and others, which provides a more stable cash flow with diversified investments, sectorally and geographically.
The merger in general will provide great benefits, especially after the “Corona” pandemic, among which is the creation of a larger entity that is able to compete better and give added value, as a result of its high financial capabilities and the integration of expertise, in addition to reducing operating and management costs and developing services and products.
Kuwait is also waiting at the same time, the expected tripartite merger deal between United Real Estate Company, Hospitality Holding Company and United Towers Holding Company, which will also lead to the establishment of a real estate entity one of the largest in the region, which will positively affect the investors in the three companies, and strengthen the portfolio Income-generating assets, and added value, in addition to increasing property rights and issuing new shares, as well as enhancing operational performance, increasing financial competitiveness and creating new investment opportunities for shareholders of the merged companies.
Finally, the local market witnessed the completion of an acquisition deal in the telecommunications sector, represented in the acquisition by Kuwait Telecom Company «stc» of the Electronic Gate Holding Company, for 23 million dinars, which will lead to the expansion of the activities of «stc» and the shift from traditional services to digital services and advanced informatics solutions in the field of integrated communications, and advanced technical solutions, by providing digital capabilities from “ICT”, “IOT” and “Cloud Services”, in addition to enhancing the company’s internal capabilities in the field of information and communication technology in line with rapid global developments.
Market
The process will allow stc to take advantage of growth opportunities in the corporate market, develop the scope of work and exchange experiences to support the digital transformation process, in order to provide the best services, products and solutions, provide the latest services and expand the company’s activities and businesses in the field of integrated communications and advanced technology solutions.
The aforementioned deals come about two years after the completion of the last merger process between two companies listed on the Kuwait Stock Exchange, specifically “House of Papers” and “Al-Aman”, which completed the merger procedures between them in March 2020, before that, specifically in December 2019, the merger of “KAMCO” affiliated to the Kuwait Stock Exchange. “KIPCO” with “Global Investment House” (Global) to change the name of the new entity to “Kamco Invest”.
This is also accompanied by the acquisition by the Gulf Insurance Group of AXA’s global stake in AXA Gulf (Bahrain, UAE, Oman and Qatar), AXA Cooperative Insurance Company (Saudi Arabia) and AXA Green Crescent Insurance Company (UAE), for $474.75 million, which is considered one of the largest acquisitions in the insurance sector in the region.