Kuwait-based Burgan Bank has announced plans to buy United Gulf Bank's holdings in four regional operations for $725 million.
The proposed transaction – which is subject to regulatory approval from the relevant authorities in Kuwait, Bahrain and four other countries – will allow Burgan to become one of the most geographically diversified Kuwaiti controlled commercial banks within the Middle East and North Africa region (MENA).
Burgan has agreed to buy United Gulf Bank’s holdings in Algeria Gulf Bank, Bank of Baghdad, Jordan Kuwait Bank and Tunis International Bank. The deal is supported by KIPCO – the parent company of both Burgan and United Gulf Bank (UGB).
The structure of the transaction will be subject to the detailed terms of the regulatory and other approvals, but it is expected that the transaction will involve the issue of 200 million new shares in Burgan Bank.
Tariq Salam, chairman of Burgan Bank, said: The purchase of holdings in these four banks is the first step in our regional expansion strategy. By acquiring these major operations in some of the most vibrant economies in the MENA region, we will be able to use our expertise in commercial banking to become one of the strongest full-service banks in the region.
Masaud Hayat, managing director of UGB, added: The sale of UGB’s regional operations to Burgan Bank will allow UGB to concentrate on investment banking and asset management. The anticipated profit we will make on the deal is an excellent return on our original investment and I expect this transaction to provide the catalyst for further growth in our business.