Finally some good economic news ... Thank you Oman ...

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Khaleej Times Online >> News >> BUSINESS
Bank Muscat in $200m pact
(Reuters)
8 January 2008

KARACHI — Oman's Bank Muscat and Japan's Nomura Holdings yesterday agreed to take over Pakistan's Saudi Pak Bank for $200 million, pushing ahead with the deal despite a political crisis and a slowing economy.


The deal, which has been in the making for at least six months, is the latest foreign move into Pakistan's strongly performing banking industry, one of the world's most profitable after five years of financial reform, economic growth and rising incomes.

The bid group, which is led by Pakistani financier Shaukat Tarin and also includes the World Bank's International Finance Corporation, has agreed to buy 85 per cent of Saudi Pak Bank for Rs29.30 ($0.47) a share, a banker involved in the deal said.

Saudi Pak Industrial and Agricultural Investment Company, the unlisted parent of Saudi Pak Bank, confirmed that it was selling its controlling stake as part of the deal, which would trigger a mandatory takeover bid for the entire bank at the same price.

"We will be selling them 68.01 per cent of the bank that we hold at Rs29.30 a share," CEO Rashid Zahir said. The deal represents a premium of nearly eight per cent to Saudi Pak's closing share price on Friday. The small lender has a market value of about $220 million based on Friday's close.

A source in the bid group said the consortium had reached agreements to buy another 17 per cent from local investors.

"We will be buying 85 per cent of the bank now, and issuing a tender offer for the remaining shares pretty soon," the source said, adding that deal was expected to close by mid-February.

High risk?

The deal went ahead despite renewed crisis in Pakistan after the killing of opposition leader Benazir Bhutto on December 27, which unleashed a wave of unrest, threatening to scare off foreign investment and derail economic growth. In the violence, mobs torched hundreds of local and foreign banks, damaging about 700 bank branches and destroying 290. The trouble coincides with a deteriorating economic outlook.

At Rs29.30 a share, the price is around 2.8 times Saudi Pak Bank's last reported net asset value per share. It is 6.5 per cent higher than the Rs27.50 a share being discussed in November, bankers with knowledge of the deal said.

The valuation would be in line with recent bank deals despite some concern over Saudi Pak Bank's bad loans, said Asif Qureshi, head of research at Invisor Securities.

Saudi Pak Bank's shares were three per cent up at Rs28.10 at 0815GMT while Bank Muscat stock was down 6.5 per cent.

The source said Bank Muscat would end up with a 35 per cent interest in Saudi Pak Bank, IFC would own 20 per cent and Nomura 13 per cent.

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