KCB NBK Merger: The Kenya Commercial Bank (KCB) has announced that it will be acquiring shares of the National Bank of Kenya (NBK) at Sh. 4.19 each. This represents a discount of 25.7 per share on the NBK’s trading price of Sh. 5.64 per share when the deal was announced, but a premium on the NBK’s last trading price of Sh. 4 per share.
KCB also announced that its acquisition of NBK will be completed by creating and issuing new 147.3 million shares to NBK’s investors. “The swap ratio has been determined on the basis of … a book discount to the value of NBK’s 180 day volume weighted average price up to and including March 16, 2019 (the date before the KCB Group board approval of the proposed offer) of one NBK share on the NSE to factor the limited enterprise value of NBK in its current financial state,” KCB said.
A report on the deal that appeared in the Business Daily on Friday also noted that this will take into account the two banks’ average share price in the 180 trading days ending mid-March.
“KCB’s share price averaged Sh41.9 over the period, according to Reuters data. This values the transaction at Sh6.1 billion, equivalent to Sh4.19 for each NBK share including the units that will emerge from converting the lender’s preferred shares into ordinary stock,” said the report.
Bizna Kenya had earlier on reported that KCB will spend a staggering Sh. 14.1 billion on the NBK in the buyout that is expected to offer a lifeline to NBK. The first of this amount will be Sh. 6.6 billion which will be used to acquire the bank in a share swap deal estimated to be of this amount. Thereafter, KCB will pump in an additional Sh. 7.5 billion in NBK in order to shore up the bank’s capital and fund its growth.
In the KCB NBK merger deal, NBK will take a 4.5 per cent in KCB. This deal is expected to be completed by the month of July this year. Interestingly, KCB chief executive officer Joshua Oigara said that KCB has adequate funds that will enable it to take in NBK without raising additional capital.