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M&A in MENA

First Gulf Bank-National Bank of Abu Dhabi

An unprecedented MENA banking merger

Freshfields’ advice ensured success in the regionally unprecedented merger of First Gulf Bank (FGB) with National Bank of Abu Dhabi (NBAD).

FGB chose Freshfields to advise on its merger with the NBAD, which has created the largest bank in the MENA region. As of 2 April 2017, the resulting First Abu Dhabi Bank had $183bn of assets and a combined market capitalisation of $30.9bn.

An unprecedented situation

As an important public M&A deal, strict confidentiality was required. Banking secrecy made due diligence difficult.

With both parties prominent in their own right, the share exchange ratio between the two banks for senior management had to be carefully – and diplomatically – considered.

The share exchange ratio between the two banks for senior management had to be carefully – and diplomatically – considered.

The lack of precedents in Abu Dhabi and the asset spread of FGB and NBAD made the post-deal structure another challenge. Both banks had footprints outside of the UAE, with international branch networks.

The structure also had to be straightforward to enable regulators in multiple countries to understand and approve it: jurisdictions included Bahrain, Brazil, Cayman Islands, Egypt, Hong Kong, India, Jersey, Jordan, Kuwait, Lebanon, Libya, Malaysia, Oman, France, Singapore, Switzerland, Qatar, South Korea, Shanghai, Sudan and the UK.

A bespoke process

Freshfields followed stringent protocols on confidentiality to ensure there were no leaks.

A lack of precedents and legal clarity meant following an established process was out of the question.

We leveraged our global platform to strategically engage with the various regulators and regulations across the world. A lack of precedents and legal clarity meant following an established process was out of the question. Instead, Freshfields essentially crafted a bespoke process.

A transformative deal

The merger was an important part of the UAE’s rapid economic transformation. Despite Abu Dhabi’s increasing economic sophistication, the banking market remained segmented. The merger was a key signal to the market to consolidate and cut costs. The Abu Dhabi government was also keen to create a banking champion to compete with other big regional banks.