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ACQUISITION

National Bank gives shareholders 14 days on KCB take-over offer

In Summary

• The National Bank of Kenya board has issued a 14-day cautionary notice to shareholders after receiving the take-over document from Kenya Commercial Bank on Wednesday.

• The takeover also awaits conversion of 1.13 million preference shares in the capital of the firm to new ordinary shares of similar amount and final approvals from Central Bank, Competition Authority and Capital Market Authority.

The National Bank of Kenya along Harambee avenue
The National Bank of Kenya along Harambee avenue

The National Bank of Kenya board has issued a 14-day cautionary notice to shareholders after receiving the take-over document from Kenya Commercial Bank on Wednesday.

According to a notice published in a local daily on Friday, the lender said acquisition will be subject to several conditions, including delisting of NBK from the Nairobi Securities Exchange upon acceptance of the offer by not less than 75 per cent of offer shares.

The takeover also awaits conversion of 1.13 million preference shares in the capital of the firm to new ordinary shares of similar amount and final approvals from Central Bank, Competition Authority and Capital Market Authority.

"This circular is in accordance with Capital Markets (Take-over and Mergers) regulations which requires shareholders be notified within 14 days for the purpose of making an informed assessment as to the merits of accepting or rejecting the take-over offer,’’ NKB statement read in part.

KCB intends to acquire up to 100 per cent of the ordinary shares of NBK through a share swap of one (1) ordinary share of KCB for every ten (10) ordinary shares of the NBK.

The announcement is coming just a week after NBK shareholders approved the conditional conversion of preference shares into ordinary shares upon the completion of a proposed takeover bid at the annual general meeting held last week Friday.

The bid had also received backing from KCB shareholders during the firm’s AGM held on May 31. They unanimously agreed to the proposal of 10-for-1 share swap transaction with a par value of Sh5 of NBK.

KCB, the largest bank in Kenya in terms of asset value expects to conclude the acquisition of the struggling NBK by October, six months after it started it started the takeover bid in April.

NBK reported a 98.3 per cent drop in profits for the year ended December 31, 2018. However, it recently recorded an after tax profit of Sh106 million in Q1 2019, 138 per cent improvement compared to similar period last year.

The bank’s chairman Mohamed Hassan on Friday said it will be operated as a standalone subsidiary of KCB Group for a period of two years post-acquisition and thereafter fully integrated into KCB Bank Kenya.

 

National Social Security Fund (NSSF)and National Treasury are biggest shareholders at NBK controlling 48.1 per cent and 22.5 per cent respectively.

KCB Group chief executive Joshua Oigara said the acquisition is part of the bank’s agenda to deliver the first bank with Sh1 trillion balance sheet in Kenya.

The combined giant lender will tower over rivals both locally and in the region with a mega balance sheet of Sh828 billion as per the two lenders’ December 2018 disclosures.