Alliance urges rejection of Bank Muscat bid

The board of Oman's Alliance Housing Bank urged shareholders to reject a hostile takeover bid by Bank Muscat on Tuesday, saying it was weighing alternatives to the offer from Oman's largest lender.

Bank Muscat will hold a meeting with Alliance shareholders on Tuesday to drum up support for its SAR 0.375 per share offer, a Bank Muscat official, who asked not to be named, said on Monday.

The board of Oman's largest mortgage lender rejected the $205 million bid earlier this month and Alliance chairman Sayyed Khalid Hamad Hamood al-Busaidi said there were other options on the table.

"The board feels that it is in the best interest of its shareholders not to be rushed into a decision of this nature at this stage," Busaidi said in a statement.

"Once we conclude our internal assessment on the various options, we shall present the shareholders with our findings and recommendations for their final decision," it said.

The statement did not give details of any other offers.

Oman Arab Bank said last week it was in informal talks to buy a stake in Alliance, but had made no firm decision yet.

Bank Muscat had decided not to sweeten its offer because it was not aware of any concrete counter-bid, the Bank Muscat official told Reuters on Monday.

Bank Muscat's offer was 36% above Alliance's share price before the bid was announced on May 9. Alliance shares have since rallied 38%, closing at SAR 0.386 on Monday.

Alliance's biggest shareholder, Oman National Investment Corp. Holding, said earlier this month it was looking for a higher price.

If investors holding 25% of Alliance shares back the offer, the Alliance board would be compelled to call an extraordinary general meeting to vote on the proposal, the Bank Muscat official said.

Approval by holders of 75% of Alliance's stock at that extraordinary general meeting would give Bank Muscat control, even without the board's consent, he said.

Not one of Alliance's 2712 shareholders owns more than 10% of its stock, according to the lender's website.

Pension and other funds managed by government and government-linked companies own about 20% of the shares. HSBC Holdings is the fourth-largest shareholder.

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READERS' COMMENTS

Counter Offer
Posted by Sam George on Tuesday 22 May 2007 at 19:16 UAE time


What counter offer could they possibly have? Majority of the banks in Muscat are no shape to buy out alliance. Honestly, its just attempt to drive share price up and make a killing.

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