First Gulf Bank board members and National Bank of Abu Dhabi’ board has approved the merger of both firms to create the largest bank in Middle East and North Africa in terms of assets worth $ 175 Billion.
The shareholders are yet to approve the merger and as per the deal, FGB shareholders will account to hold 52% of the combined entity where National Bank of Abu Dhabi will hold 48% and has stated to retain its name. FGB shareholders will receive 1.254 shares of NBAD for every FGB share held.
NBAD’s Chairman Nasser Ahmed Alsowaidi comments on the merger -”We will have the capital, expertise and international networks to be the preferred financial partner for anyone doing business along the West-East Corridor” Since the deal is yet to be approved, speculation was in air that FGB was planning to takeover NBAD by paying a 14% premium. But recent updates state the merger to be a combination of equals and FGB’s share will be de-listed following the merger. The plan is to deliver cost synergies of approx. 500 Millions Dirhams annually. Cost benefits on the other hand are to be realized over three years, and the one time integration cost is expected to be 600 Million Dirhams.
Market Move
NBAD shares rose by as much as 6.1 per cent in early trading, eventually closing up 4 per cent at Dh10.05, their highest level since September.
Shares in FGB rose by as much as 4.7 per cent before eventually closing up about 2 per cent at Dh12.85, their highest close in two weeks.
