DUBAI, June 7 (Reuters) – A bid by Qatari investors to buy a 25 percent stake in Ahli United Bank (AUB) AUBB.BH (AUBK.KW), Bahrain’s biggest lender, has been delayed by up to three months on price negotiations, a source familiar with the matter said.
The group of up to five private investors from Qatar think the $1.3 billion price tag for the stake is high, the source told Reuters on Monday.
“The process has slowed down because people understand the price is not right,” he said. “The price is seen as quite high.”
Negotiations are ongoing and require two to three months in addition to the original deadline to reach a decision, after assessing the value of AUB’s books, he said.
The initial deadline to reach a decision was around June 12.
In April, AUB said Kuwaiti investment firm Tamdeen (TAMK.KW) and other unnamed shareholders had agreed to sell the stake in the Bahraini bank to an undisclosed buyer from the Gulf Arab region, in a deal estimated at about $1.3 billion. [ID:nLDE6350Y4]
No further details were disclosed by the bank since, raising questions about whether the deal would go through. Bahrain’s central bank said in April it was aware of the sale but did not know the identity of the buyer.
If approved, the deal would make the buyer the single largest shareholder in the bank.
The source said there were no other bidders involved.
He told Reuters earlier in April the investors plan to convert the lender into a wholly Islamic bank.
AUB’s Kuwaiti unit is being converted into bank compliant with Islamic law, or sharia.
Bankers see merger and acquisition activity in the Gulf Arab region recovering slightly in 2010, driven by sovereign wealth funds and companies restructuring in the wake of the global financial crisis.
Deals have slowed as capital dried up and a valuation gap between sellers and buyers appeared.
AUB’s Kuwait listing has fallen 27 percent since hitting a five-month high on April 7. The Bahrain listing has dropped by 25 percent over the same period.
Political tensions recently escalated between Bahrain and Qatar. Bahrain said Qatari coast guard shot and wounded on May 8 a Bahraini fisherman who had entered Qatari waters. (Additional reporting by Matt Smith; Editing by Louise Heavens)