Following numerous unconfirmed reports earlier today, Diamond Bank Plc has finally disclosed that it would be merging with Nigeria’s tier-1 lender, Access Bank Plc, to form Sub-Saharan Africa’s biggest retail bank.
According to a press statement that was signed by Diamond Bank’s Chioma Afe and issued exclusively to Nairametrics, Diamond Bank’s board of directors made the decision after a strategic review which led to a competitive bidding process, with Access Bank Plc ultimately emerging as the most preferred bidder.
The statement also revealed that the board of Diamond Bank Plc believes this is the best direction to take in order to protect the interests of its customers, shareholders, and employees.
Furthermore, the bank said it would recommend the matter to its shareholders soon. In the meantime, the completion of the merger is subject to certain important approvals to be gotten from some unnamed shareholders as well as regulatory bodies.
All things being equal, the deal is expected to be completed before the end of March, 2019.
Dozie and Wigwe have reacted to the development
Meanwhile, Diamond Bank’s Chief Executive Officer, Mr Uzoma Dozie, has reacted to this development. In his words-
“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.”
Access Bank’s CEO, Herbert Wigwe, also reiterated Mr Dozie’s position, stating that “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.”
More details on this development
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 will receive a consideration of N3.13 per share, comprising of N1.00 per share in cash and N2.13 per share equivalent in newly issued shares of Access Bank to be exchanged for the outstanding shares of Diamond Bank. The offer represents a premium of 260% 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.
If you are a shareholder in Diamond Bank you can calculate what your total share will be after the merger by clicking here.
This is not a case of liquidation
Immediately following completion of the merger, Diamond Bank would be absorbed into Access Bank and it will cease to exist under Nigerian law without going into liquidation. 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 In addition, Access Bank will assume all of Diamond Bank’s indebtedness following the consummation of the merger and upon obtaining all requisite approvals.
Recall that Nairametrics first to break this story yesterday night, confirming our weeks-long speculation on the matter.
If this merger pulls through, which is most likely a possibility, it would become the biggest corporate deal the Nigerian business environment has witnessed this year.
About Diamond Bank Plc
Diamond Bank Plc was incorporated on December 20, 1990 and began operating as a private limited liability company on March 21, 1991. Ten years later, in February 2001, Diamond Bank became a universal bank. In January 2005, Diamond Bank became a public limited company following a highly successful Private Placement share offer which substantially raised the Bank’s equity base. In May 2005, the Bank was listed on The Nigerian Stock Exchange.