FGB’s shares will be delisted from the stock exchange today ahead of its merger with NBAD. Today will be the last day of trading in FGB. Shares in the new entity, NBAD, will begin trading on Sunday after the formal declaration of the new merged entity at the close of trade today. Keep an eye out for updated guidance from FGB and NBAD’s mgmt. on the merged entity in the first week of April. Management’s initial guidance on cost synergies from the merger is AED500mn per annum. The banks also expect the merger to involve integration costs of AED600mn. Mgmt. have not laid out any estimates for revenue synergies. Based on yesterday’s closing prices of FGB and NBAD, we believe the listing price of the merged entity will be AED10.3/share. 

Natl. Bank of AD (AD)   : AED10.45 as of 29 Mar. 2017, Rating: Neutral, TP: AED10.40/share, MCap: USD14,835mn, NBAD UH/NBAD.AD

First Gulf Bank (AD): AED12.95 as of 29 Mar. 2017, Rating: Neutral, TP: AED13.10/share, MCap: USD15,879mn, FGB UH/FGB.AD