10-01-2021
• A larger and stronger bank with a strong financial position and high liquidity.
• A variety of banking businesses, customer portfolios and premium products.
• A stronger base for financing development initiatives in line with Qatar Vision 2030.
• A combined entity with strong government support and ownership.
• Added value to shareholders through the realization of the merger potential.
• Maintaining the legal entity of Masraf Al Rayan by the merging entity.
In a joint press release issued today, and following the announcement on 30 June 2020 of a possible merger (“merger”), Al Rayan Bank (“Al Rayan”) and Al Khaliji Commercial Bank (“Al Khaliji”) announced the conclusion of a merger agreement on 7 January, 2021 (the “Merger Agreement”). After the merger, Al-Khaliji's activities will be contained in Al Rayan, and Al Rayan will be the remaining legal entity, which will continue to operate in accordance with the principles and provisions of Islamic Shari’ah.
Merger and price structure
The proposed merger between Al Rayan and Al Khaliji will be implemented through a legal merger according to which the Al Khaliji Bank will be dissolved and all of its assets and liabilities become part of Al Rayan Bank by virtue of law, as of the completion of the merger.
Al Rayan Bank will issue 0.50 Al Rayan shares for every Al Khaliji’s share, equivalent to a total of 1,800 million new shares to be issued to Al Khaliji shareholders. The share swap ratio indicates a premium for Al Khaliji’s shareholders of 21.4% against the closing price of the trading day prior to the announcement of the Board of Directors meeting to discuss the merger (closing price on 5 January, 2021) and 66.7% against the stock price prior to the announcement of the initial negotiations for the potential merger (closing price On 30 June, 2020).
The merger agreement is conditional on obtaining regulatory approvals, Al Rayan and Al Khaliji shareholders' approval, and other approvals. Al Rayan and Al Khaliji will continue operating independently until the effective date of the merger.
His Excellency Mr. Ali bin Ahmed Al Kuwari will be the Chairman of the Board of Directors, while His Excellency Sheikh Hamad Bin Faisal Bin Thani Al Thani will be the Deputy Chairman of the Board of Directors of the merged entity.
The Executive Committee of the Board of Directors will be chaired by His Excellency Sheikh Hamad bin Faisal bin Thani Al Thani.
Merger goals
The merger, which is supported by the Al Rayan and Al Khaliji Board of Directors, once implemented, will create a larger and stronger financial institution with a strong financial position and liquidity to support Qatar's economic growth and finance development initiatives in line with Qatar Vision 2030.
This is in addition to the establishment of one of the largest Shari’ah-compliant banks in the State of Qatar and the Middle East with assets of more than 172 billion Qatari riyals (47 billion US dollars), as of 30 September, 2020.
The merger is also expected to positively contribute to economic development in the State of Qatar by supporting small and medium-sized enterprises and institutions, and it will also create a strategic partner for the public sector.
Furthermore, the merger will bring together the main strengths of the two banks in the areas of retail banking, private banking, corporate and government institutions, capital markets, and wealth and asset management.
The merged entity will have a strong presence in Qatar and an expanded international presence, which will help to achieve leadership in the Qatari market in terms of operating efficiency, and increase the potential for future growth due to the increase in the capital base, in addition to the great potential for integration, which in turn will maximize the value of shareholders' equity.
The merger process will result in achieving advanced operating efficiency ratios in the coming years, and it is expected that it will lead to a reduction of approximately 15% of the total annual expenses collected, based on the data for the first nine months of 2020 in stages after the completion of the merger, driven by an increase in the volume of operations and gains reduced cost resulting from improved operating efficiency. There is also the possibility of revenue integration between the two banks.