By Tony Obiechina, ABUJA
The recent acquisition of Diamond Bank by Access bank will create Nigeria’s and indeed Africa’s largest retail bank by customers.
The Board of Diamond Bank which stated this in statement on Monday “believes that the merger is in the best interest of all stakeholders including, employees, customers, depositors and shareholders”.
According to the statement signed by the Bank’s Company Secretary/Legal Adviser, Uzoma Uja, “completion of the merger is subject to certain shareholder and regulatory approvals.
The statement reads: “The proposed merger would involve Access Bank acquiring the entire issued share capital of Diamond Bank in exchange for a combination of cash and shares in Access Bank via a Scheme of Merger.
“The Board of Diamond Bank Plc (“Diamond Bank”) today announces that following a strategic review leading to a competitive process, the Board has selected Access Bank Plc (“Access Bank”) as the preferred
bidder with respect to a potential merger of the two banks (“the merger”) that will create Nigeria and Africa’s
largest retail bank by customers.
“The Board of Diamond Bank believes that the merger is in the best interest of all stakeholders including, employees, customers, depositors and shareholders and has agreed to recommend the offer to Diamond Bank’s shareholders.
“Completion of the merger is subject to certain shareholder and regulatory approvals. The proposed merger would involve Access Bank acquiring the entire issued share capital of Diamond Bank in exchange for a combination of cash and shares in Access Bank via a Scheme of Merger.
“Based on the agreement reached by the Boards of the two financial institutions, Diamond Bank shareholders will receive a consideration of N3.13 per share, comprising of N1.00 per share in cash and the allotment of two
(2) New Access Bank ordinary shares for every seven (7) Diamond Bank ordinary shares held as at the Implementation Date.
“The offer represents a premium of 260% to the closing market price of N0.87 per share of Diamond Bank on the Nigerian Stock Exchange (“NSE”) as of December 13, 2018, the date of the final binding offer.
“Immediately following completion of the merger, Diamond Bank would be absorbed into Access Bank and it will cease to exist under Nigerian law. The current listing of Diamond Bank’s shares on the NSE and the listing of Diamond Bank’s global depositary receipts on the London Stock Exchange will be cancelled, upon the merger becoming effective.
“Diamond Bank expects the transaction to be completed in the first half of 2019.We will keep the market updated with any new development.”
Although Access Bank has finally acquired Diamond Bank, the official announcement of the transaction will be made in the course of the week by the Central Bank of Nigeria (CBN).
Last week, Diamond Bank announced its decision to drop its international operating licence to focus on national operations following capitalisation issues.
Uzoma Dozie, the bank’s chief executive officer, confirmed the development in a statement released on Friday.
“With this approval, the bank will cease to operate as an international bank,” Dozie had said.
Reacting to the development, Professor Uche Uwalele, head of Banking and Finance Department, Nasarawa State University, Keffi, said it was a welcome development for the banking industry in Nigeria.
In a statement in Abuja on Monday, Prof Uwaleke said, “Given the strengths of the two banks, there is little doubt that the union involving Access bank’s strong fundamentals with CAR of over 20% and Diamond bank’s digital-driven services will produce synergies that will be positive for financial inclusion in Nigeria.
“By this merger, Access bank has emerged as one of the biggest banks in Africa by customer base. The scheme of merger is a win-win for the shareholders of the two banks.
“The purchase consideration is fantastic at over N3 per share for a target bank whose share price is less than N1 per share. As part of the purchase consideration, the offer of 2 shares for every 7 shares of the target bank is a fair deal. Little wonder, the shares of Diamond bank is now very much sought after by investors and are currently on bid.
“It is important to note that what is playing out here is different from the case of the defunct Skye bank which was taken over by Polaris, owing to protracted ill- health.
“While the bridge bank arrangement involved huge cost on the part of the CBN, the case of Access and Diamond banks is clearly a marriage between two consenting adults requiring only approval by the regulatory authorities.
“It does not matter if one partner is stronger than the other. So, it does not call for any panic on the part of either the customers, employees, creditors, shareholders or the public.
“The banking structure in Nigeria, like in many other countries of the world, is oligopolistic in nature and so mergers and acquisitions should be expected to continue to shape the financial landscape for good especially in a highly competitive environment where the gap between tier 1 and tier 2 banks is widening by the day”.