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National Commercial Bank Announces the Signing of a Framework Agreement with Samba Financial Group in relation to a Potential Merger of the Two Banks

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Announcement Detail National Commercial Bank (“NCB”) announces that it entered into a Framework Agreement on 25 June 2020 with Samba Financial Group (the “Framework Agreement”) in order to begin a reciprocal due diligence process and to negotiate definitive and binding terms of a potential merger of NCB and Samba Financial Group (the “Proposed Transaction”).

Pursuant to the Framework Agreement, the parties have agreed on a non-binding basis the following:

- that the Proposed Transaction, should it proceed, will be completed by way of a merger (pursuant to the Companies Law and the Merger and Acquisitions Regulations issued by the Board of the Capital Market Authority and other relevant laws and regulations) with NCB being the merging bank and Samba Financial Group being the merged bank; and

- subject to the results of the reciprocal due diligence exercise, the shareholders of Samba Financial Group will receive between 0.736 and 0.787 newly issued share of NCB in exchange for every share they hold in Samba Financial Group (the “Exchange Ratio Range”). The two banks, as advised by their respective financial advisers, reached this range by performing financial analysis using a comprehensive and widely used set of valuation methodologies. The final exchange ratio will be determined in the definitive agreements of the Proposed Transaction.

Based on this Exchange Ratio Range, the total consideration payable by NCB to Samba Financial Group’s shareholders, should the Proposed Transaction complete within that range, will be between approximately 1,441 million to 1,540 million new NCB shares. At a closing share price of SAR 37.25 per NCB share on 24 June 2020, the Proposed Transaction, if completed within that range, would value each Samba Financial Group share at SAR 27.42 – SAR 29.32, which represents a premium of 19.2% - 27.5% to the Samba Financial Group share price as of 24 June 2020.

The parties have also agreed in the Framework Agreement that they will negotiate definitive agreements in relation to the Proposed Transaction that will set out the relevant commercial terms thereof, including (without limitation): (i) the final structure of the Proposed Transaction, (ii) the final exchange ratio, (iii) the name of the merging bank and the approach to its branding, (iv) the composition of the board and the parties’ approach to the management of the merging bank, and (v) the location of the head office of the merging bank. The Framework Agreement also includes customary provisions that regulate confidentiality, exclusivity, restrictions on trading and other related matters.

The parties intend to conclude the reciprocal due diligence process and sign the definitive agreements in relation to the Proposed Transaction, if they agree to their final terms, within a period of four months from the date of this announcement.

It must be noted that neither NCB nor Samba Financial Group is under an obligation to proceed with the Potential Transaction. Therefore, there can be no assurance that the Framework Agreement and the reciprocal due diligence process will result in the Proposed Transaction being agreed on a final and binding basis, or that if agreed, the Proposed Transaction will be completed. Completion of the Proposed Transaction will be subject to various conditions including, but not limited to, approval of the Saudi Arabian Monetary Authority, the Capital Market Authority, the General Authority for Competition and the shareholders of each of NCB and Samba Financial Group in accordance with applicable legal requirements.

NCB does not expect that the proposed merger will, if completed, result in the involuntary redundancy of employees.

The Proposed Transaction involves related parties and directors who have a conflict of interest in relation to it, which will be assessed by NCB for the purpose of ensuring compliance with the relevant rules and regulations. The details of all related parties and conflicted directors will be announced at a later stage.

NCB has appointed J.P. Morgan Saudi Arabia Company as its financial advisor, and Abuhimed Alsheikh & Alhagbani Law Firm as its legal advisor, in connection with the Proposed Transaction.

NCB will continue to announce any material developments in relation to the Proposed Transaction as required by the relevant rules and regulations.

The Capital Market Authority and the Saudi Stock Exchange take no responsibility for the contents of this disclosure, make no representations as to its accuracy or completeness, and expressly disclaim any liability whatsoever for any loss arising from, or incurred in reliance upon, any part of this disclosure, and the issuer accepts full responsibility for the accuracy of the information contained in it and confirms, having made all reasonable enquiries, that to the best of their knowledge and belief, there are no other facts or information the omission of which would make the disclosure misleading, incomplete or inaccurate.

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