Shearman & Sterling advised Goldman Sachs Saudi Arabia, acting as the financial advisor to The Saudi British Bank (SABB), on the merger of SABB with Alawwal Bank (Alawwal).
Following the non-binding agreement entered into on May 16, 2018, the boards of directors of SABB and Alawwal have approved the entry into of a binding merger agreement. The parties agreed on a share exchange ratio of 0.485 shares of common stock of SABB to be issued for each share of common stock of Alawwal. The exchange ratio implies a valuation for Alawwal’s issued and outstanding share capital of approximately SAR 18.6 billion (approximately $4.96 billion). The proposed merger would create Saudi Arabia’s third-largest bank, with assets of SAR 268 billion ($71 billion).
The merger of SABB and Alawwal is subject to shareholder and regulatory approval and a number of other conditions. Both banks will remain independent and continue to operate on a business-as-usual basis until the merger has completed, is expected during the first half of 2019. Upon completion, SABB shareholders will own 73% and Alawwal shareholders will own 27% of the combined bank on a fully diluted basis.
Since its founding in 1977, SABB has been an active partner supporting the Kingdom of Saudi Arabia’s economic growth and social development. SABB maintains a valuable strategic partnership with the HSBC Group and during that time, SABB has facilitated the participation of HSBC in the Kingdom of Saudi Arabia.
Alawwal, the Kingdom’s oldest bank, was founded in 1926 and is headquartered in Riyadh. The bank has assisted the issuance of Saudi Arabia’s first currency, facilitated payment for the first oil export and is now a leader of the banking industry’s digital transformation.