National Bank of Kenya (NBK) is set to receive a life line following an interest by the Kenya Commercial Bank (KCB) to acquire its shares. The move signals a deepening in mergers and acquisitions in the banking sector.
KCB board announced in a statement approved by Capital Markets Authority (CMA) stating “We KCB Group Plc hereby give notice that we intend to acquire 100 per cent of the ordinary shares with a par value of Sh5 of NBK.”
It added that the offer shall be by way of a share swap of 10 ordinary shares of NBK for every one ordinary share of KCB.
The bank added that that if the offer is accepted by shareholders holding at least 90 per cent of NBK shares, KCB will apply to CMA to compulsorily acquire remaining shares.
In addition, if acceptance of 75 per cent of the offer shares are received and subject to regulatory approval, the offer shares will be delisted from the Nairobi Securities Exchange (NSE).
The deal will moreover require approval from Capital Markets Authority (CMA), Competition Authority of Kenya (CAK) and Central Bank of Kenya (CBK) as well as shareholders of the two entities.
Earlier in the day shares of both companies were suspended from trading in the NSE in line with clause 9.4.2(II) of NSE Equity trading rules.
The most profitable bank in Kenya will be buying the least profitable bank. While speculations on the buyout have been prevalent in the country for about two years informed by NBK’s liquidity challenges, KCB is also looking to consolidate its base as the biggest bank by assets in the region.
Recently, KCB also announced that it will be taking over Imperial Bank. In the move announced by CBK, KCB will take over five branches of Imperial Bank while CBK and Kenya Deposit Insurance Corporation (KDIC) continue to explore options for the remaining staff and branches.