Bank Dhofar, the second biggest lender in the Sultanate of Oman, has proposed a non-binding merger with Ahli Bank in a deal that if and when approved could create a powerful new financial player in the country.
The proposal follows a decision to this effect by Bank Dhofar’s Board of Directors during its meeting on April 10, 2023.
However, the proposed merger still requires approvals from the relevant regulatory bodies, as well as the respective boards of directors and shareholders of both banks. Should the transaction proceed, further updates will be provided at the appropriate time, Bank Dhofar said in a regulatory filing on Monday.
A non-binding merger proposal is a preliminary offer that does not create a legally binding agreement between the two companies. Instead, it allows them to discuss the potential benefits and drawbacks of a merger without committing to it. This approach provides the parties with flexibility, as they can walk away from the negotiation process if it does not seem to be in their best interests.
Moreover, a non-binding merger proposal can provide an opportunity for both companies to assess the potential benefits and risks of a merger, including financial, operational, and cultural considerations. It can help them make informed decisions about whether to proceed with the merger.
In addition, it can provide a chance to gauge market reactions to a potential merger and assess its potential impact on stakeholders, such as customers, employees, and shareholders.
Overall, a non-binding merger proposal can be a useful tool for exploring the potential benefits of a merger while minimizing the risks associated with a legally binding commitment.