KARACHI: The United Bank Limited (UBL) has formally submitted an offer to Silkbank Limited for the amalgamation of Silkbank Limited with and into UBL.

“The United Bank Limited is pleased to inform that it has submitted an offer to Silkbank Limited for the amalgamation of Silkbank with and into UBL pursuant to a scheme of amalgamation to be filed with and sanctioned by the SBP under Section 48 of the Banking Companies Ordinance, 1962,” according to an information sent to Pakistan Stock Exchange on Friday.

As consideration for the amalgamation, the UBL has proposed to issue and allot new UBL ordinary shares to the shareholders of Silkbank on the basis of a ratio of one (01) new UBL ordinary share for every 325 Silkbank ordinary shares.

The offer and the amalgamation remain subject to approval of the Board of Directors and shareholders of UBL, execution of definitive transaction documents between UBL and Silkbank, and receipt of all corporate, regulatory and third-party approvals and consents required for the amalgamation, it added.

As part of the deal, the UBL proposes a share swap ratio of 1 new UBL share for every 325 Silk bank shares and upon completion, this ratio implies an estimated price for Silkbank shares at Rs 0.96, considering UBL will issue 27.94 million new shares to Silkbank shareholders, analysts at Arif Habib Limited said.

Post-amalgamation, UBL’s total outstanding shares would increase to 1,252 million, potentially diluting current shareholdings but strengthening UBL’s customer base, analysts said.

The transaction, while solidifying UBL’s balance sheet and market position, remains dependent on due diligence regarding Silkbank’s asset quality and liabilities.

“This expansion, if finalized, would represent a consolidation within Pakistan’s banking sector after seven years.”

Copyright Business Recorder, 2024