National Commercial Bank (NCB) and Samba Financial Group, two of Saudi Arabia’s largest banks, are planning a merger deal worth up to $15.3bn.
Both companies signed an initial agreement last week to create a combined entity with almost $214bn in assets.
They also entered a framework agreement to start a reciprocal due diligence process and negotiate the terms of the deal.
According to the draft proposals, Samba investors will reportedly receive newly issued shares in NCB in exchange for their existing shares.
Around 1.54 billion new shares could be issued which would value the deal at SR57.4bn, based on the closing price of SR37.25 for each NCB share on 24 June.
NCB, the largest bank in Saudi Arabia, holds total assets of around $135bn, while Samba is said to be the fifth largest lender in the country with assets of around $68bn.
The merged entity is expected to form third largest bank by assets, after Qatar National Bank and the UAE’s First Abu Dhabi Bank.
According to the reports, the lenders plan to conclude the process within four months. Details regarding the name of the merged bank, the composition of its board and the location of the head office etc are yet to be announced.
NCB has appointed JP Morgan Saudi Arabia as its financial advisor and AbuhimedAlsheikh&Alhagbani as its legal advisor.
Morgan Stanley MS Saudi Arabia are the financial advisor to Samba, while Khoshaim& Associates is serving as its legal advisor.