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BankDhofar announces terms of merger proposal with Ahli Bank

20 May 2023

Muscat – After submitting a revised non-binding merger proposal to the board of directors of Ahli Bank on April 26, 2023, BankDhofar has announced further details of its revised non-binding offer of its merger proposal with Ahli Bank.

The revised offer proposes issuance of 1.2910 shares of BankDhofar ordinary shares for each share of Ahli Bank, according to a press release issued by BankDhofar.

The proposed share-swap ratio implies an attractive valuation of 200bz per share for Ahli Bank based on BankDhofar’s unaffected share price of 155bz prior to the initial offer of merger proposal as at April 9, 2023. The offer also entails an option for shareholders to opt for cash consideration for up to 25 per cent of their holding in Ahli Bank at the offer price of 200bz per share.

BankDhofar said that the revised offer is a highly value accretive proposition for all Ahli Bank shareholders. The offer price implies a 15 per cent premium to Ahli Bank’s unaffected share price, prior to submission and announcement of initial merger proposal to Ahli Bank board.

The offer price values Ahli Bank shares at 1.30x book value. Moreover, based on latest share price of BankDhofar, the proposed offer and share-swap ratio implies further increase in the effective value for each Ahli Bank share to 227bz per share, 1.48x book value and 30.6 per cent premium to Ahli Bank’s unaffected share price (applicable to the 75 per cent share component as per the offered share-swap ratio).

BankDhofar noted that the offer price reflects a substantial premium to the valuation multiples of the Omani banking sector.

For entities which are Shariah-compliant, Shariah-compliant juristic shareholders and their subsidiaries, the proposed merger offer includes 100 per cent cash payout at an offer price of 200bz per share, taking into account inability to hold shares in a conventional bank.

BankDhofar intends to fund the cash component of the offer from its existing liquidity and capital resources as well as contribution from BankDhofar’s existing shareholders.

The terms of the revised offer for merger with Ahli Bank clearly demonstrate strong commitment by BankDhofar, its board members and shareholders towards further strengthening of Omani banking sector offering improved value proposition to all the stakeholders.

The proposed merger 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.

The transaction is subject to obtaining necessary approvals from relevant regulators as well as boards and shareholders of BankDhofar and Ahli Bank.

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