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HSBC, Sohar Int get initial nod for merger proposal

New growth: HSBC Bank Middle East Limited (HBME) weighs plan to establish new wholly owned banking branch in Oman

MUSCAT: HSBC Bank Oman SAOG and Sohar International Bank SAOG announced on Tuesday that they have agreed to enter into a non-binding memorandum of understanding on proceeding to exclusive discussions in relation to the possible merger between the two entities.

The publicly listed banks said in separate filings that the basis of a merger will be by incorporation whereby HSBC Oman would be dissolved and its shareholders offered a consideration valuing HSBC Oman at 1.0x book value, with such consideration consisting of shares of Sohar International with the option for the shareholders of HSBC Oman to elect to receive the consideration in cash, provided that the maximum cash consideration payable by Sohar International to the shareholders of HSBC Oman that elect to receive cash consideration shall not exceed 70 per cent of the total consideration payable by Sohar International.

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 respective book value of each bank would be calculated at a later date.

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 banks’ respective boards, regulators and shareholders, the lenders said.

HSBC Oman CEO Melika Betley further added that the bank has been informed by HSBC Group, its major shareholder, of its intention for HSBC Bank Middle East Limited (HBME) to establish a new wholly owned banking branch in Oman.

“If the proposed merger discussions were to lead to a binding agreement, HBME would then request regulatory approvals for the setup of this new branch,” Betley added.

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