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CBK approves National Bank of Kenya takeover by KCB

In July, National Bank board reluctantly approved the buyout saying that KCB Group undervalued the company by almost 38 per cent in the proposed takeover offer

In Summary

• The approval has been granted in accordance with Section 13(1) (e) of the Banking Act,’’ CBK said

The National Bank of Kenya along Harambee avenue
The National Bank of Kenya along Harambee avenue
Image: FILE

Central Bank of Kenya has approved the takeover of National Bank of Kenya (NBK), setting stage for final approvals on the deal.

In April, KCB Group Plc declared its intention acquire 100 per cent stake of National Bank of Kenya through a share swap deal, comprising of 10 ordinary shares of NBK for every 1 ordinary share of KCB.

In a statement on Monday, the banking regulator said the acquisition will strengthen both institutions leveraging on their respective well-established domestic and regional corporate, public sector and retail franchises.

"The Central Bank of Kenya (CBK) announces that it has approved the acquisition of 100 per cent shareholding of National Bank of Kenya Limited (NBK) by KCB Group PLC (KCB Group). The approval has been granted in accordance with Section 13(1) (e) of the Banking Act,’’ CBK said.

Eyes are now on the Capital Market Authority (CMA) to suspend NBK’s trading on the Nairobi Securities Exchange (NSE) and subsequent delisting upon acceptance of the offer by not less than 75 per cent of the Offer Shares including scope for minority squeeze out.

In July, National Bank board reluctantly approved the buyout saying that KCB Group undervalued the company by almost 38 per cent in the proposed takeover offer.

The board, in the advisory circular to its shareholders, said the fair valuation is one KCB share for every 6.23 NBK shares and not 1 for every 10 as offered.

The Offer requires that the 1,135,000,000 preference shares in the capital of the Bank held by the two principal shareholders – the National Treasury (“GOK”) and National Social Security Fund (“NSSF”) should be converted on a one/one basis into 1,135,000,000 new ordinary shares at the Completion of the Take Over Bid.

The approval by CBK is coming barely three weeks after High Court dismissed a petition challenging the acquisition of National Bank of Kenya by KCB Group.

Evans Aseto and John Kiptoo who moved to court questioning the legality of the deal wanted the transaction stopped.

In its ruling, the court determined that the petition lacked merit as it failed to understand the independent legal framework for the acquisition of shares in publicly listed companies under the Capital Markets Act and the Capital Markets (Take-overs and Mergers) Regulations 2002.

Early last month, Parliamentary Finance and National Planning Committee on tabled a report opposing the takeover, instead proposing a recovery plan for NBK.

The committee led by Kipkelion East MP Joseph asked NBK's principal shareholders - the National Treasury (22.5 percent) and the National Social Security Fund (NSSF) (48.05 per cent) to reject KCB's offer to acquire 100 per cent shareholding.

The acquisition is part of KCB’s ongoing strategy to explore opportunities for new growth while investing in and maximising returns from existing businesses.