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BM makes vigorous bid to woo AHB shareholders

MUSCAT — In an unprecedented incident, shareholders of a specialised bank in Oman gathered here yesterday for a meeting — not called by their board of directors, but by another bank which is bidding for a hostile take-over of their institution.

Alliance Housing Bank (AHB) shareholders were vigorously urged by senior officials of BankMuscat (BM), the Sultanate's largest commercial bank, to back its move for a merger between the two which, they said, was in their best interests. Citing track records of the two banks, they claimed that BM was on a "trajectory of growth and profitability," while AHB was "struggling to stand on its own."

BankMuscat first made the union proposal on May 8 which was rejected outright by AHB's board of directors. Again, on Monday, after advertisements by BM appeared in local newspapers inviting AHB scrip-holders to yesterday's presentation on its merger proposition, directors of the housing bank promptly issued a statement advising them not to "rush into a decision."

"The board of directors of AHB is fully aware of the keen interest of BankMuscat in taking over the bank. However, the board feels that it is in the best interest of its shareholders not to be rushed into a decision of this nature at this stage," the statement by AHB Chairman Sayyid Khalid Hamad Hamood al Busaidy said.

In its first response spurning the proposal, AHB had said it was considering "better strategic options" from other financial institutions and would come out with its decision shortly. However, it has not so far revealed details of the alternative offers.

"We believe our offer is good for Alliance Housing Bank shareholders. We are not trying to rush you into a decision... We want you to take an informed decision," Sunder George, BM's Deputy Chief Executive, said addressing yesterday's meeting, the first of its kind in Oman's corporate history and probably of the region, held at the conference hall of the Muscat Securities Market (MSM) and attended by many of AHB's major and small shareholders.

"Ours was an open offer to merge; it was a generous, fair and transparent offer. We were surprised to get a swift rejection within two days," George added, also squashing rumours that the meeting was called to announce a revised bid. "We are not making a new offer," he clarified.

BM's offer, valued at RO79 million, involves paying 375 baizas for each Alliance share, which is 34 per cent more than the pre-offer market price. By way of payment, it is offering one of its shares for every 3.13 Alliance equities.

As per Omani laws, if 25 per cent of AHB shareholders are in favour of the offer made by BM, they can ask their chairman to call an extraordinary meeting (EGM) to seek approval from shareholders. If 75 per cent of those who attend the EGM are in favour of the offer, AHB has to opt for merger without waiting for an approval from its board.

Making a detailed presentation on the merger scheme, K Gopakumar, General Manager, Wholesale Banking, said BM provided "a good option for the existing shareholders to cash in on the bank's business and be part of a larger successful bank and get higher returns on their investment."