Three Mergers On Fire Create Giant Entities - Banking, Investment, Real Estate

Kuwaiti business circles are abuzz with speculation about upcoming mergers that would result in the development of several financially and economically massive enterprises in the banking, investment, and real estate sectors, as well as the telecommunications industry.

According to a local Arabic daily, the expected deals coincide with Kuwait's gradual recovery of economic activity after two years of suffering due to the "Corona" crisis, which resulted in the country's near-total closure of various economic sectors for the longest period of time among all countries in the world.

The purchase transaction between "Kuwait Finance House" (KFH) and Ahli United Bank-Bahrain, which is regarded as one of the most important prospective acquisitions, would lead to the development of a massive Islamic banking organization, is one of the highlights on the list of activities.

Many disclosures have emerged between the two sides of the deal recently, the most recent of which is that the specialized advisors appointed by the boards of directors of "KFH" and "Ahli United" have completed the due diligence study and submitted their reports to the boards of directors of the two banks for consideration and evaluation, after agreeing to update them and resume related procedures after they were halted in the last two years due to the "Coro" scandal.

KFH also told Al Ahli United Bank's Board of Directors that an updated share exchange rate would be subject to shareholder and regulatory approvals, while the two banks debate the proposed share exchange rate and viable alternatives.

On the other hand, the merger between Kuwait Projects Company Holding Company "KIPCO" and Qurain Petrochemical Industries Company "Al-Qurain" is simmering quietly, as the two companies signed a memorandum of understanding under which they agreed to evaluate the merger offer, which will result in the formation of an investment holding company that will be among the largest in the Middle East and North Africa region, with assets totalling $10 billion.

The merged entity will benefit from a well-balanced and diversified portfolio of assets, making it the first company to achieve integration in its investment portfolio locally, as it will include petroleum chemicals and oil services, as well as banking, foodstuffs, insurance, industry, real estate, media, and other businesses, resulting in a more stable cash flow from diversified sectorial and geographic investments.

The merger will provide numerous benefits, particularly following the "Corona" pandemic, including the creation of a larger entity that will be better able to compete and provide added value as a result of its strong financial capabilities and expertise integration, as well as lower operating and management costs and the development of new services and products.

Kuwait is also anticipating the expected tripartite merger between United Real Estate Company, Hospitality Holding Company, and United Towers Holding Company, which will result in the formation of a real estate entity that will be one of the largest in the region, benefiting investors in the three companies and strengthening their portfolios of income-generating assets and added value, as well as increasing property rights and issuing new shuras.

Finally, the local market saw the completion of a telecommunications acquisition deal, with Kuwait Telecom Company «stc» purchasing Electronic Gate Holding Company for 23 million dinars, which will allow «STC» to expand its activities and shift from traditional services to digital services and advanced informatics solutions in the field of integrated communications, as well as advanced technical solutions, by providing

The process will enable STC to take advantage of corporate market growth opportunities, expand the scope of work, and share experiences in order to support the digital transformation process, providing the best services, products, and solutions, and expanding 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 last merger process between two companies listed on the Kuwait Stock Exchange, specifically "House of Papers" and "Al-Aman," which was completed in March 2020, and before that, specifically in December 2019, the merger of "KAMCO" affiliated with the Kuwait Stock Exchange, which was completed in December 2019. To substitute the "KIPCO" with "Global Investment House" (Global).

This is complemented by the Gulf Insurance Group's $474.75 million purchase of AXA's global investment in AXA Gulf (Bahrain, UAE, Oman, and Qatar), AXA Cooperative Insurance Company (Saudi Arabia), and AXA Green Crescent Insurance Company (UAE), which is one of the region's largest insurance purchases.

 

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