Bankdhofar intends to make acquisition offer for Ahli Bank

Following its announcement of a revised nonbinding merger offer to Ahli Bank on May 18 and after considering all its options, the Bankdhofar board on Tuesday resolved to make an offer to acquire 100 per cent of issued share capital of Ahli Bank in a takeover pursuant to the Acquisition and Takeover Regulations and to therefore withdraw its merger proposal.

In a press release, Bankdhofar said that the terms of its acquisition offer will be identical to the terms previously outlined in the revised non-binding merger offer. The terms are summarised below:

Offer structure

The offer provides all Ahli Bank shareholders with an option to elect to receive up to 25 per cent of their consideration in cash; the rest of the consideration will be paid in the form of newly issued Bankdhofar shares. For Ahli Bank shareholders who are: (i) Sharia-compliant juristic shareholders; or (ii) subsidiaries of Sharia-compliant juristic shareholders, the cash component will be increased to 100 per cent of total consideration received, to reflect their (or their parent shareholder’s) de jure inability to receive shares in a conventional bank.

Bankdhofar envisages to fund the cash component of the offer from its existing liquidity and capital resources as well as a contribution from the bank’s existing shareholders, if and as required.

Financial terms

The financial terms of the acquisition offer are set forth as follows: (i) 1.2910 Bankdhofar ordinary shares per Ahli Bank share (swap ratio), valuing each Ahli Bank share at 200bz based on the Bankdhofar closing share price of 155bz as at April 9 (ii) 200bz per each Ahli Bank share as the cash component.

The above terms represents: a premium of 15 per cent to Ahli Bank’s closing share price of 174bz as at April 9; an implied price to Q1 2023 book value multiple of 1.30x.

Since the submission of its initial non-binding offer to the board of Ahli Bank on April 10, Bankdhofar’s share price has appreciated. As a result, for the share component, this appreciation translates into a significant increase in the value of each Ahli Bank share under the agreed swap ratio of 1.2910.

As at closing share prices of Ahli Bank on May 17, the swap ratio of Bankdhofar's revised offer now represents: a premium of 30.6 per cent to the Ahli Bank unaffected share price, valuing each Ahli Bank share at 227bz based on the Bankdhofar closing share price of 176bz; an implied price to Q1 2023 book value multiple of 1.48x, by far exceeding the average price to book value multiple of the Omani banking sector.

For the avoidance of doubt, the cash component values each Ahli Bank share at 200bz.

After completion of the takeover offer, Bankdhofar will look to effect a combination with Ahli Bank. The bank believes that a combination of Bankdhofar and Ahli Bank is a compelling opportunity for Ahli Bank shareholders to create a leading domestically-focused whollyowned Omani bank with a robust competitive position.

'The proposed transaction offers an immensely attractive opportunity for shareholders of both entities to benefit from value creation with significant synergy possibilities and to participate in the long-term growth story, whilst ensuring a strong and well capitalised bank on day one. We remain highly confident in our ability to successfully execute the contemplated transaction,' Bankdhofar said.