1. Strategies behind and Lessons Learned From Our Experience
MERGER & ACQUISITIONS
Strategies behind and Lessons Learned From Our Experience
Sabah Almoayyed
May 27,2001

2. INDEX What is Merger/Acquisition? Reasons behind mergers
The Gulf Market
Key drivers for the business combination
Strategies that made it Successful
What obstacle would a merger face?
Conclusion

3. What is Merger/Acquisition?
When firms join together, whatever the motive for or nature of the combination as long as the merged firms are worth more combined than apart, the NPV of the union will be positive.
The shareholders are better off 1

4. Reasons behind mergers
Shareholder
Globalization
Synergy and economies of scale
Revenue Synergies (Cross – Boarder & Cross – Product)
Cost Synergies
New Technologies/decreasing margins
Eliminating Inefficiencies 2

5. The Gulf Market Financial Services World is changing
Local institutions in our region are in fairly good shape, but SIZE MATTERS!
If they continue to ignore this fact they risk being swept aside 3

6. Key drivers for the business combination
Increased size
Product complementarity
Extensive geographical coverage
Shareholder value enhancement
Short term earnings growth
Medium term earning growth
Enhanced Share Profile
Other Benefits
Skills transfer
Improvement in competitive position 4

7. Strategies that made it Successful
Pre – Deal Stage :
Formation of Merger Implementation Committee (MIC) to review:
Synergy Evaluation
Integration Project Planning
Due Diligence
Valuation report
A business plan was prepared accordingly 5

8. What obstacle would a merger face?
Strategic/Cultural Fit
Realistic Valuation
Successful IT integration 6

9. Conclusion
Experience and academic research tells us that 50% - 70% of deals fail to create value
Mergers and Acquisitions are challenge and a danger
We will be experiencing a lot more mergers and acquisitions in the coming years 7