Abuja, Nigeria: Access Bank Plc, which plans to buy Diamond Bank Plc to become Africa’s largest retail lender by customers, said it will conclude the transaction about two months earlier than initially expected.
The deal, which was set to close in June, will be completed in the second quarter, the Lagos-based lender said on Thursday. Access Bank also canceled a planned 75 billion naira ($207 million) rights issue as it’s no longer needed to meet the central bank’s minimum capital thresholds, Chief Executive Officer Herbert Wigwe said on an investor call.
Access Bank agreed last year to buy Carlyle-backed Diamond Bank in a deal worth about $200 million. It said last week it obtained “approval-in-principle” from Nigeria’s Securities and Exchange Commission and the Central Bank of Nigeria to proceed with the merger.
By the conclusion of the deal, Access’s assets could swell to about $17 billion from $12.5 billion, according to Bloomberg calculations. Zenith Bank Plc is currently the largest Nigerian lender, with $15.4 billion of assets.
Access Bank’s shares rose 6.2 percent to 6 naira at close of trading in Lagos, while Diamond Bank climbed 0.5 percent to 2.10 naira.
Shareholders will vote on the transaction on March 5.
EARLIER: Diamond Bank Confirms Merger With Access Bank
The board of Diamond Bank Plc on Monday finally announced its merger with Access Bank Plc expected to be completed in first half of 2019. Both banks had recently denied media reports of any merger.
Mr Uzoma Dozie, the bank’s Chief Executive Officer, said in Lagos the board had selected Access Bank as the preferred bidder with respect to a potential merger of both banks.
Dozie said the potential merger of the two banks would create Nigeria and Africa’s largest retail bank by customers.
He added that the transaction to be completed in the first half of 2019 was in the best interest of all stakeholders.
Dozie said the completion of the merger was 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 N1 per share in cash,” he said.
Dozie also said the transaction would include the allotment of two new Access Bank ordinary shares for every seven Diamond Bank ordinary shares held as at the implementation date.
“The offer represents a premium of 260 per cent to the closing market price of 87k per share of Diamond Bank on the Nigerian Stock Exchange (NSE) as of Dec. 13, 2018, the date of the final binding offer,” Dozie said.
He said the bank’s shares would be absorbed into Access Bank at the completion of the merger and Diamond Bank would 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,” he added.
Dozie said the proposed combination with Access Bank would create one of Africa’s leading financial institutions.
“The board of Diamond Bank believes that the proposed combination of the two operations provides an exciting prospect for all stakeholders in both businesses, he said.
Mr Herbert Wigwe, Access Bank the Chief Executive Officer, said: “Access Bank has a strong track record of acquisition and integration and has a clear growth strategy.
“Access Bank and Diamond Bank have complementary operations and similar values, and a merger with Diamond Bank with its leadership in digital and mobile-led retail banking’
“This could accelerate our strategy as a significant corporate and retail bank in Nigeria and a Pan-African financial services champion,” said Wigwe.