The Kenya Commercial Bank (KCB) will acquire shares of the National Bank of Kenya (NBK) at Ksh4.19 each.
This represents a discount of 25.7 per share on the NBK’s trading price of Ksh5.64 per share when the deal was announced.
“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.
During the acquisition, KCB has also announced that it will create new 147.3 million shares to NBK’s investors.
The merger will see KCB become the biggest bank in the region in terms of assets under management, amounting to over Ksh1 trillion in three years.
KCB, which also operates in Uganda, Tanzania, Rwanda, Burundi and South Sudan, last month offered to buy NBK through a share swap of one KCB share for every 10 of NBK.
However, in the merger proposal, KCB will maintain NBK as a standalone subsidiary of KCB Group for a period of two years post-acquisition and thereafter fully integrate NBK into KCB Bank Kenya.
KCB plans to de-list NBK fro the Nairobi Stock Exchange (NSE) upon the receipt of 75 percent of the bank’s total shareholding.
The majority stake of the NBK is owned by the National Social Security Fund (NSSF), and is set to relinquish its shares in case the takeover succeeds.
KCB recorded a Ksh24 billion profit (22 percent rise) while NBK’s profits slumped by 98 percent in 2018.
NBK has been struggling with bad debt amounting to more than Ksh30.1 billion, part of it which it might be forced to write off for non-recovery.
Principal owners also were hesitant in injecting Ksh4.2 billion bailout money, leaving the management stranded.
It was reported last year by Kahawa Tungu that a bigger chunk of the debt was orchestrated by top managers who looted the bank to its knees.