KCB Group set to acquire struggling NBK

KCB Group #ticker:KCB is set to acquire the entire stake of state-owned National Bank of Kenya, #ticker:NBK deepening the mergers and acquisitions in Kenya’s banking sector.

The lender, the largest in Kenyan market, announced Thursday that the deal will be completed subject to approval from shareholders of the two banks as well as regulators.

“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,” KCB board announced in a statement approved by Capital Markets Authority (CMA).

“The offer shall be by way of a share swap of 10 ordinary shares of NBK for every one ordinary share of KCB.”

The disclosure confirms about two-year speculations that KCB was considering buying NBK, which is facing capital constraints.

The National Treasury’s promise to pump in more money has delayed to close to a year now.

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.
Completion of the deal will require approval from CMA, Competition Authority of Kenya and Central Bank of Kenya as well as shareholders of the two entities.

Both firms are listed at Nairobi Securities Exchange (NSE) #ticker:NSE and their trading was halted Thursday morning to allow for the investors to absorb the news.

“NSE wishes to inform investors, shareholders and the general public that we have halted trading of KCB and NBK shares as we await material disclosure from NBK affecting the two counters,” NSE had said in Thursday morning statement.

The halt is in line with clause 9.4.2(II) of NSE Equity trading rules.

The clause states that NSE may temporarily halt trading in one or more securities prior to obtaining a clarification from a company on a report regarding the company which has been brought to the attention of the bourse.

In addition, the halt can be effected when there are “unusual market movements in price or volume of a security.”

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