Burgan to buy Turkish arm of EFG Eurobank
Kuwait, April 9, 2012
Burgan Bank, one of Kuwait’s leading banks with presence in Jordan, Iraq, Algeria and Tunisia, has entered into an agreement with Greek lender Eurobank EFG to acquire a 99.26 per cent stake in Eurobank Tekfen, Turkey.
Under the terms of the SPA, Burgan Bank has agreed to acquire the stake for a consideration value of KD99 million ($355 million) representing 0.98x based on September 30, 2011 shareholders’ equity.
In addition, Burgan Bank has also agreed to acquire an additional portfolio of Turkish loans from EFG amounting to KD78million.
The total consideration will be funded fully from Burgan’s existing internal cash resources. The final execution of the transaction is subject to regulatory approvals from Central Bank of Kuwait and Turkey’s Banking Regulation and Supervision Agency.
Eurobank Tekfen was established in 1989 by Tekfen Group as an investment and finance bank. EFG acquired a 70% stake in the Bank in 2007 to further its regional presence.
Burgan, the commercial banking arm of Kuwait Projects Co (Kipco), will also absorb $280 million of loans issued by EFG to the Turkish unit as part of the deal, it said in a bourse filing on Monday.
Its shares rose 2.4 per cent on the Kuwaiti bourse by 1025 GMT.
Banking sources had told Reuters last week that the sale was imminent and Burgan was likely to offer Eurobank Tekfen's book value of $350 million.
Eurobank Tekfen, a partnership between EFG Eurobank and Turkey's Tekfen Holding, was put up for sale last July by Greece's second-largest bank.
The sale comes as Greek banks, hit by the country's sovereign debt crisis, look to boost their capital base to cope with a protracted recession and a rise in non-performing loans.
Citigroup Global Markets Limited acted as the exclusive financial advisor for Burgan Bank on this transaction. – Reuters and TradeArabia News Service