Access, Diamond Banks Merger to Be Finalised First Half 2019

By Obinna Chima

The business combination agreement between Access Bank Plc and Diamond Bank Plc will be finalised by the first half of 2019.

The Board of Directors of Diamond Bank disclosed this in a statement on Monday.

“Diamond Bank expects the transaction to complete in the first half of 2019,” the statement explained.

The statement also revealed that following a strategic review that led to a competitive process, the board of Diamond Bank selected Access Bank as the preferred bidder with respect to a potential merger of the two banks that would create Nigeria and Africa’s largest retail bank by customers.

“The Board 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.

“Completion of the merger is subject to certain shareholder and regulatory approvals,” it added.

According to Diamond Bank, the proposed merger would involve Access Bank acquiring the entire issued share capital of Diamond Bank in exchange for a combination of cash and shares in Access Bank via a Scheme of Merger.

Based on the agreement reached by the Boards of the two financial institutions, Diamond Bank shareholders would receive a consideration of N3.13 per share, comprising of N1 per share in cash and the allotment of 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 per cent to the closing market price of N0.87 per share of Diamond Bank on the Nigerian Stock Exchange (NSE) 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.

Commenting on the agreement, the Chief Executive Officer of Diamond Bank, Uzoma Dozie, said: “The proposed combination with Access Bank will create one of Africa’s leading financial institutions.

“There is clear strategic rationale for the proposed merger and strong complementarities between the two institutions.

“While Diamond Bank has pioneered Nigeria’s largest technology led retail banking platform, Access Bank is one of Nigeria’s leading full-service commercial banks. Consolidation in the Nigerian banking industry is an inevitable, natural progression in a sector where the gap between Tier 1 and Tier 2 banks has been widening and scale has become critical; where technology will disrupt the traditional business model while enabling broader financial inclusion.

“The board of Diamond Bank believes that the proposed combination of the two operations provides an exciting prospect for all stakeholders in both businesses and will create a financial institution with the scale, strength and expertise to capitalise on the significant opportunities in Nigeria and sub-Saharan Africa more broadly.”

On his part, the CEO of Access Bank, Herbert Wigwe said: “Access Bank has a strong track record of acquisition and integration and has a clear growth strategy.

“Access Bank and Diamond Bank have complementary operations and similar values, and a merger with Diamond Bank, with its leadership in digital and mobile-led retail banking, could accelerate our strategy as a significant corporate and retail bank in Nigeria and a Pan-African financial services champion.

“Access Bank has a strong financial profile with attractive returns and a robust capital position with 20.1 per cent capital adequacy ratio (CAR) as at 30 September 2018.

“We believe that this platform, together with the two banks’ shared focus on innovation, financial inclusion and sustainability, can bring benefits to Access Bank and Diamond Bank customers, staff and shareholders.”

Exotix Capital acted as international financial advisor to Diamond Bank, and Templars acted as Nigerian legal counsel.