Bahrain's Ahli United stock jumps on NBAD merger talk

By Ulf Laessing and John Irish

KUWAIT/DUBAI (Reuters) - Shares of Ahli United Bank AUBB.BH (AUBK.KW) made their biggest one-day gain in more than three months on Sunday on media reports the Bahrain bank was in talks to merge with National Bank of Abu Dhabi NBAD.AD (NBAD).

NBAD, the emirate's biggest bank, denied it was in talks on any regional merger or acquisition after reports in Kuwait's al-Wasat and al-Watan dailies boosted Ahli United stock 3.88 percent, its biggest single-day climb since March 9.

Negotiations between the two banks to create one of the Gulf region's biggest banks had reached an advanced stage, and the two banks had already ratified a deal, Arabic-language al-Wasat reported, without identifying a source.

A second Kuwaiti daily, al-Watan, said the merger was being studied and could take the form of a share swap. The paper also did not provide a source.

"The bank currently is not part in any negotiations or talks with any bank or financial institution in the region for merger or acquisition," NBAD said in a statement on the bourse website after trading hours.

NBAD shares were unchanged on Sunday.

Ahli United Bank, Bahrain's biggest bank, "was not the source of the information and was not aware of the source of the information," it said in a statement on the Bahrain bourse website. In a separate filing on the Kuwaiti bourse website, Ahli said the news published was "not true."

Banks in the world's biggest oil-exporting region have benefitted from a more than six-fold rise in oil prices since 2002 by expanding their lending businesses as Gulf states plough record oil revenues into infrastructure, real estate and industry.

Many are exploring mergers and acquisitions as part of their expansion strategies. Emirates Bank International Ltd and National Bank of Dubai were combined by the Dubai government last year to create the Gulf region's biggest bank by assets.

Ahli United was courted last summer by International Bank of Qatar, an affiliate of National Bank of Kuwait (NBKK.KW), which made a $6.1 billion offer to take over the Bahraini bank.

The deal fell through in August after Kuwait's Tamdeen Investment Co. (TAMI.KW), which was then Ahli's second-largest shareholder, turned down the offer.

REASONABLY VALUED

According to Al-Wasat, the deal with NBAD values Ahli United's stock at 600 Kuwait fils per share and NBAD's shares at 24 dirhams ($6.54) per share. One NBAD share would be exchanged for three Ahli shares under the deal, it said.

Shares of Ahli United, which are also listed in Kuwait, ended at 355 fils on Sunday, while NBAD shares closed at 21.3 dirhams. Ahli United shares ended at $1.34 in Bahrain.

"The reason AUB has been rising is the news that it might merge with NBAD," said Shakeel Sarwar Butt, head of asset management at SICO investment bank in Bahrain.