Kuwait is an Arab state found at the northwestern region of the Arabian Gulf. The sovereign state covers an area of 17,818 square kilometers and is bordered by the Arabian Gulf to the east, on the north and west by Iraq, and by Saudi Arabia to the south. The 2008 Index of economic freedom ranks Kuwait as the second-most free economy in the entire Middle East. The nation has a well-developed banking system with several banks dating back before oil discovery. The nation holds 10% of the world’s reserves that translate to 104 billion barrels (Crystal, 1992).
Part VII of Kuwait’s company law elaborates that mergers can only be through acquisition or combination. In the former, the legal personality of a company that is bought by another disappears, while in the latter the merged companies maintain their legal personality (Campbell & Netzer, 2009). The most prominent merger in the nation’s history was that which integrated the Kuwait oil company (KOC) and the Kuwait national petroleum company (KNPC) to form the Kuwait Petroleum Corporation on 27 Jan 1980, and bringing the company under effective government control. The Kuwaiti commercial code article 23 and 24 define the basic premise of conducting business. Non-Kuwaiti citizens are not allowed to pursue commercial activities unless they have a Kuwaiti partner whose share must be in excess of 51% (Merger of companies Jordanian Law, 2010). However, the Kuwaiti parliament enacted the law no. 8 on 22 April 2001 in attempts to attract foreign investments. The law allows up to 100% foreign ownership of companies is specific sectors of the economy (Campbell & Netzer, 2009). Foreign entities can now establish joint ventures under simple contracts. Consequently, the number of reported mergers and acquisition over the last decade has increased drastically.
The Ahli United Bank was established on 31 may 2000 under a merger between the Al-Ahli commercial bank and the United Bank of Kuwait PLC. The two subsidiaries are owned by the AUB, which is licensed to operate in retail banking by the Central Bank of Bahrain. The continued trend of mergers has increased following calls by the Central Bank of Kuwait (CBK) to counter the repercussions of the global economic crisis that started in the year 2007.
The following are examples of most recent mergers:
Acquisition of the Wasabi Chain of Restaurants by the Sultan Center on early 2007 for a reported $ 17.3 million
Acquisition of the SADAFCO (UNITED FISHERIES) by the UNITED INDUSTRIES COMPANY on 21 may 2007 for a reported $124.7 million
References
Campbell, D., & Netzer, A. (2009).International joint ventures. Alphen aan den Rijn, The Netherlands: Kluwer Law International
Crystal, J. (1992). Kuwait: the transformation of an oil state. Boulder: Westview Press.
Merger of companies Jordanian Law - Al Tamimi & Company. (n.d.). Al Tamimi & Company. Retrieved December 26, 2012, from http://www.tamimi.com/en/publication/publications/section-1/april-2/merger-of- companies-jordanian-law.html
Our History and Our Future - Ahli United Bank. (n.d). Welcome to Ahli United Bank. Retrieved December 26, 2012, from http://www.ahliunited.com/bh_aub.html
Recent mergers and acquisition activities in Kuwait http://www.noorlbofund.com/news/ma- activity-kuwait2007.pdf
