banking

Sohar International, HSBC Oman sign MoU on merger-

July 27, 2022

The potential merger deal would see HSBC Oman dissolved and its shareholders offered shares in Sohar International or cash not exceeding 70% of total consideration payable by Sohar International

Muscat – HSBC Bank Oman on Tuesday announced that its board of directors has agreed to enter into a non-binding memorandum of understanding (MoU) with Sohar International Bank to proceed with exclusive talks in relation to a possible merger between two banks.

In their disclosures submitted to the Muscat Stock Exchange, HSBC Oman and Sohar International said that a potential merger deal would see HSBC Oman dissolved and its shareholders offered shares in Sohar International or cash not exceeding 70 per cent of the total consideration payable by Sohar International. The offered consideration would value HSBC Oman at 1.0X book value.

The shares of Sohar International that would form part of the consideration to the shareholders of HSBC Oman would value Sohar International at 1.0X book value. The book value of each bank would be calculated at a later date, the banks said in their separate disclosures.

Following the announcement on Tuesday, the shares of HSBC Bank Oman and Sohar International Bank jumped by 10 per cent and 7.7 per cent, respectively, at the Muscat Stock Exchange.

The ongoing exclusive discussions, negotiations and the potential merger shall remain subject to due diligence and entry into definitive agreements, in addition to obtaining final approvals from the respective boards, regulators and shareholders, the lenders said.

HSBC Middle East to open new branch in Oman

HSBC Oman said it has been informed by HSBC Group – HSBC Oman’s major shareholder – of its intention for HSBC Bank Middle East Limited to establish a new wholly owned banking branch in Oman.

‘If the proposed merger discussions were to lead to a binding agreement, HSBC Bank Middle East Limited would then request regulatory approvals for the setup of this new branch,’ HSBC Oman added in its disclosure.

Sohar International in June first expressed its intention to explore the possibility of a merger with HSBC Oman by sending a letter of intent to the board of directors of HSBC Oman.

In November 2021, Sohar International initiated merger talks with Bank Nizwa too. In January this year, Sohar International and Bank Nizwa both received approval from the Central Bank of Oman to start the due diligence process for a merger between the two entities.

Clarifying on the proposed merger with Bank Nizwa, Sohar International in June confirmed that the proposed merger process with Bank Nizwa was ‘in progress’ as announced earlier.

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