DUBAI, July 28 (Reuters) - Oman's Bank Dhofar , the second-largest lender in the sultanate by assets, said on Thursday its board of directors had approved a rights issue to raise up to 40 million rials ($103.9 million).

Shares will be priced at 0.2 rial each, it said. That's below the 0.237 rial price at which the stock closed on Wednesday. Further details of the issue will be announced after the bank obtains regulatory approvals, it said.

Bank Dhofar, which earlier this month posted a 16.2 percent rise in second-quarter net profit, has been in talks with Bank Sohar over a potential merger since 2013. In June, the two lenders said they agreed the deal would be structured as one share of Bank Dhofar exchanged for 1.29 shares of Bank Sohar.

(Reporting by Tom Arnold; Editing by Andrew Torchia) ((Tom.Arnold@thomsonreuters.com; +97144536265; Reuters Messaging: tom.arnold.thomsonreuters.com@reuters.net))