CBN Accept the trade between Access and Diamond Banks’ Merger.
The proposed merger between Access Bank Plc and Diamond Plc yesterday has received heavyweight endorsement from the Central Bank of Nigeria (CBN) which said it had no objection to the planned business combination between them.
The CBN, in an apparent response to an application for pre-merger by Access Bank stated,We refer to your letter dated December 17, 2018 on the above subject (application for pre-merger) and write to inform you that the Central Bank of Nigeria has no objection to your proposed merger with the Diamond Bank Plc he said.
but you are required to obtain other necessary regulatory approvals for themerger.
More boosts came from the stock market that reacted positively to the planned business combination as the share prices of both banks surged at the close of trading yesterday morning
This is just as Diamond Bank, which confirmed the deal, said its planned business combination agreement with Access Bank Plc would be finalised before the end of the first half of 2019.
Meanwhile, the Securities and Exchange Commission (SEC) has said it is waiting for formal application from the banks on the merger.
the Access Bank and Diamond Bank have both notified the commission and the general public.
It is a notice to merge, they have not merged yet. SEC is awaiting their application on the matter.
The SEC which was received on Monday, December 17, 2018, notice of intention by Diamond Bank & Access Bank to be merge together. The commission is currently waiting for their formal application, SEC said in a statement.
At the close of trading on the Nigerian Stock Exchange (NSE) yesterday, while Diamond Bank Plc appreciated by 9.47 per cent from N0.95 to N1.04, Access Bank Plc went up by 9.40 per cent from N7.45 to close at N8.15.
Investors traded 70.984 million units of Diamond Bank Plc shares worth N72.643 million, while they exchanged 13.615 million units of Access Bank Plc for N108.550 million.
Meanwhile, stock market operators welcomed the deal, saying it would bethe best thing that can happen to Diamond Bank.
For instance, Mr. David Adonri of Highcap Securities Limited, in an interview with the reporters said, Diamond Bank Plc has been failing. Merger with Access Bank has finally rescued the bank from imminent collapse.
The terms of merger weighs heavily in favour of Diamond Bank Plc.
In her reaction, the Group Managing Director/CEO, Emerging Africa Capital Group, Mrs. Toyin Sanni, said the news was not entirely a surprise for two reasons he said
It has been rumoured some weeks ago but denied.
There have been indications that Diamond Bank could benefit from the stronger liquidity that a bank like Access Bank brings to the table to them.
However, the Board of Directors of Diamond Bank in a statement yesterday, explained that Diamond Bank expects the transaction to complete in the first half of 2019.
The statement also revealed that following a strategic review that led to a competitive process, the board of Diamond Bank selected Access Bank as the preferred bidder with respect to a potential merger of the two banks that would 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 the employees, customers, depositors and shareholders and has agreed to recommend the offer to Diamond Bank’s shareholders today.
The Completion of the merger is subject to certain shareholder and regulatory to approvals it added.
According to Diamond Bank, 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 made reached by the Boards of the two financial institutions, Diamond Bank shareholders would receive a consideration of N3.13 per share, comprising of N1 per share in cash and the allotment of 2 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 N0.87 per share of Diamond Bank on the 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.
the CEO of Access Bank, Herbert Wigwe 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 share similar values, and a merger with Diamond Bank, with its leadership in digital and mobile-led retail banking, could accelerate our strategy as a significant corporate and retail bank in Nigeria and a Pan-African financial services champion.
“Access Bank has a strong financial profile with attractive returns and a robust capital position with 20.1 per cent capital adequacy ratio (CAR) as at 30th of September 2018.
We believe that this platform, together with the two banks’ shared focus on innovation, financial inclusion and sustainability, can bring benefits to Access Bank and Diamond Bank customers, staff and shareholders and also to everyone who was banking with diamond bank before.