NBK shareholders urged to swap shares for KCB’s ahead of looming takeover

In an advertisement placed on local dailies, KCB promises NBK shareholders an average return of over 20 percent on equity. capitalfm
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NAIROBI, Kenya, Aug 11 – Holders of National Bank of Kenya (NBK) shares have been asked to swap them for Kenya Commercial Bank (KCB) shares.

This comes ahead of a looming takeover of cash strapped NBK by KCB Group, which is the country’s largest lender by assets.

The offer closes on Friday 30th August.

In 2018, National Bank recorded a 98 percent drop in profit to Sh7 million, up from Sh400 million in the previous year as the lender struggled to recover its bad loans.

Earlier this year, KCB Group offered to buy 100 percent of NBK through a share swap consisting of one KCB share for every 10 of the National Bank.

Among the conditions by KCB to NBK for completion of the acquisition, including the latter delisting from the NSE and the conversion of 1,135,000,000 preference shares in the capital of the firm to 1,135,000,000 new ordinary shares.

Should it become successful, National Bank will be the second bank KCB group is taking over after Central Bank accepted the final offer from the bank to take over Imperial Bank Limited, which is in receivership.

“KCB proposes to maintain NBK as a stand-alone subsidiary of KCB Group post-acquisition,” KCB said in a circular regarding the transaction.

The buyout is currently awaiting the approval of the Capital Markets Authority, the Central Bank of Kenya, and the Competition Authority of Kenya.

The takeover has however faced opposition from National Assembly Finance Committee.

The committee has recommended that NBK’s principal shareholders – the National Treasury (22.5 percent) and the National Social Security Fund (NSSF) (48.05 percent), reject KCB’s offer to acquire 100 percent shareholding, the minority shareholders and other shareholders.

It has termed KCB’s offer as unfair and wants Treasury to seek alternative ways of rescuing the bank.

KCB gave an offer bid share price of Sh3.80 with NBK’s total value as Sh6 billion, against an independent valuation of a per-share price of Sh6.10 and a total value of Sh9 billion.

The offer to take over National bank marks the second major deal among lenders in the last three years.

Privately held Commercial Bank of Africa is in process of merging with NIC Bank, a deal that has been approved by shareholders of both parties. 

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