(MENAFN - Kuwait News Agency (KUNA)) Burgan Bank Monday announced plans to buy United Gulf Bank's holdings in four regional operations for a total of USD 725 million (KD 194 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 MENA region.
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 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 in the order of 200 million new shares in Burgan Bank.
The announcement follows extensive studies by Burgan and its external advisers on how to implement the company's strategy for regional expansion.
The deal is supported by KIPCO - the parent company of both Burgan and UGB - and follows the statements made by Mr Faisal Al Ayyar, KIPCO's Vice Chairman, at the company's recent Shafafiyah Investor's Forum.
At the meeting, Mr. Al Ayyar outlined KIPCO's intentions to reorganize its financial services businesses and the sale of UGB's regional operations to Burgan is seen as the first stage in these plans.
Commenting on the proposed deal, Burgan Bank's Chairman Mr Tariq Abdul Salam 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." UGB's Managing Director, Mr Masaud Hayat said "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." Once the relevant authorities have given their consent to the transaction, Burgan Bank and UGB expect it to be completed towards the end of June, 2008
