Finance & Investment, Market Updates

Access Bank Plc Acquires Diamond Bank Plc

Introduction

After weeks of speculation as to the true nature of the deal between Access Bank and Diamond Bank, the two parties finally released press statements confirming a merger (Acquisition) deal on the 17th of November, 2018.

About Seller Company

Diamond Bank Plc, together with its subsidiary, provides banking and other financial services to corporate and individual customers in Nigeria, rest of West Africa, and Europe. The company operates through four segments: Treasury, Business Banking, Retail Banking, and Corporate Banking. It offers investment, commercial and retail banking, securities dealing, and custodian services. It has a LTM Revenue of 77 billion Naira with an asset size of 1.5 trillion Naira.

About Buyer Company

Access Bank Plc, together with its subsidiaries, provides various financial products and services primarily to individuals, multinationals, corporates, and institutional and non-institutional clients in Africa and Europe. It operates through four segments: Corporate and Investment Banking, Commercial Banking, Personal banking, and Business Banking. It has a LTM Revenue of 255 billion Naira with an asset size of 4.5 trillion Naira.

Deal Structure as per Capital IQ

Access Bank Plc (NGSE: ACCESS) signed a memorandum of agreement to acquire Diamond Bank Plc (NGSE: DIAMONDBNK) from The Carlyle Group L.P. (NasdaqGS: CG) and others for NGN 72.5 billion on December 17, 2018. Consideration will be paid in a combination of cash and shares in Access Bank via a scheme of merger. As part of the consideration, Diamond Bank shareholders will receive a consideration of NGN 3.13 per share, comprising of NGN 1 per share in cash representing total cash amount of NGN 23.2 billion and the allotment of 6.7 billion representing 2 new Access Bank ordinary shares for every 7 Diamond Bank ordinary shares held as at the implementation date. The offer represents a premium of 260% to the closing market price of NGN 0.87 per share of Diamond Bank on the Nigerian Stock Exchange 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. Uzoma Dozie, Diamond’s Chief Executive, will resign but other senior executives are set to stay. Deal is subject to certain shareholder and regulatory approvals. The Board of Directors 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. Diamond Bank expects the transaction to complete in the first half of 2019. Fabrizio Ferrero of Exotix Partners LLP is acting as international financial advisor and Templars (Barristers & Solicitors) as Nigerian legal counsel for Diamond Bank. Chapel Hill Denham Group and Citigroup Global Markets Limited are acting as financial advisors while Banwo & Ighodalo is acting as legal advisor to Access Bank on the transaction.

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