Economic Growth Leads To Mega Mergers

As the shadow of COVID-19 recedes and the oil price rises, analysts predict that the current economic revival will lead to several mega mergers and acquisitions (M&A). According to them, many of these M&A activities are being revived and could be carried out soon, after being put on hold after the economic downturn.

Agricultural, banking, investment, real estate, and telecom mergers and acquisitions are expected to result in the emergence of large financial and economic conglomerates.

Kuwait Finance House (KFH) is slated to merge with the Bahrain-based Ahli United Bank in the near future, potentially creating one of the largest Islamic financial institutions in the region.

There are indications that the specialized advisors appointed by both boards have completed their due diligence studies and submitted their reports to both boards for consideration and evaluation. It is also reported that KFH informed the Al Ahli United Bank Board of Directors about an updated share exchange rate, subject to shareholder and regulatory approval.

In addition to Qurain Petrochemical Industries Company (QPIC), Kuwait Projects Company (KIPCO) and Kuwait Petroleum Corporation (KPC) have recently signed the memorandum of understanding for the evaluation of a merger proposal. By the end of 2018, KIPCO had assets totaling over KD10 billion. Enter QPIC - once owned by the government and now one of the leading private investors in Kuwait's petrochemicals sector. As per the latest financial data disclosed by the two companies, the partnership - which has a total assets of around KD800 million, a primary focus on energy and industrial sectors - will result in the formation of one of the largest investment holding companies in the Middle East and North Africa region, with assets totaling over KD10 billion..

Through the merger, the company will gain a balanced and diversified portfolio of assets and become the first company in the local investment sector to achieve integration. In addition to the new firm's broad portfolio, which includes petrochemicals, food, insurance, industry, real estate, media, and others, it will have a branch in petrochemicals.

By diversifying investments, sectorally and geographically, these diverse portfolios will produce a more stable cash flow. By combining expertise and financial capabilities, and reducing operating and management costs, the new entity will also be able to compete better and add value to its shareholders.

One of the largest real estate companies in the region is set to merge with a trio of companies involving United Real Estate Company (URC), Hospitality Holding Company, and United Towers Holding Company.

URC is one of Kuwait's leading real estate developers and one of the largest players in the MENA region in terms of total assets as of the end of 2021, which is KD 600 million. URC operates primarily through its operating subsidiaries and investment arm across the MENA region and has an extensive portfolio of properties that includes shopping malls, hotels, residential communities, and high-rise office buildings.

In addition to enhancing operational performance, increasing financial competitiveness, and creating new investment opportunities for shareholders, the merger will provide positive impacts for investors in the three companies, strengthen the income-generating assets of the diversified portfolio and add value.

Last, but not least, Kuwait Telecommunications Company (formerly Viva and now stc) completed an acquisition for KD23 million of Electronic Gate Holding Company, on the local market. A Kuwaiti holding company and a major player in the telecommunications industry, Kuwait Telecommunications Company was established in 2008.

In the years to come, stc's activities will gradually move from traditional to digital services, including integrated communications, technological solutions, and enhanced digital services, including information and communication technologies, the Internet of Things (IoT), and Cloud services, in addition to strengthening internal capabilities in the field of information and communication technology in response to global trends.

This initiative will allow stc to be able to benefit from growth opportunities in the corporate market, expand their range of work and exchange ideas with other companies and organizations to help support the transformation of the corporate sector into a digital one, thereby providing the best services, products and solutions, expanding business activities and expanding their advanced technology solutions.

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