SABB SABB

31.20 0.32 1.03 %

SABB, Alawwal in deal to create Saudi's third largest bank

(5/17/2018 2:23:00 AM)

Saudi British Bank (SABB) has reached an agreement to merge with Alawwal Bank that would create Saudi Arabia’s third-biggest bank with assets of around $77 billion.

One of the kingdom's leading financial institutions, SABB is 40 per cent owned by HSBC Holdings. Alawwal Bank, a unit of Royal Bank of Scotland, pointed out that the boards of both banks had now reached a preliminary, non-binding, agreement on the share exchange ratio, subject to a number of important steps, including agreement on a number of other commercial issues.

Based on this preliminary agreement, Alawwal bank shareholders would be receiving 0.485 SABB shares for each of its share, said the Alawwal Bank in a statement.

As per this exchange ratio and the closing price of SR33.5 per SABB share on May 14, 2018 (being the last trading day prior to the date of this announcement), the merger would value each Alawwal Bank share at SR16.3 and Alawwal bank's existing issued ordinary share capital at SR18.6 billion.

This represents a premium of 28.5 per cent to the Alawwal Bank share price as of May 14 this year.

Alawwal pointed out that while discussions were now at an advanced stage, any binding agreement to proceed with a merger would still be subject to a number of conditions, including shareholder and regulatory approvals.

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