- Access shareholders to vote on deal in March
- Diamond Bank had been hit by loan losses
- Access says no need to sell shares for deal
Nigeria’s Access Bank aims to complete its 72 billion naira ($235 million) takeover of Diamond Bank by April 1, once it secures shareholder approval.
The takeover will narrow the competition for banks in Nigeria, where the top five lenders control more than 60 percent of assets.
Access Chief Executive Herbert Wigwe said on Thursday shareholders were expected to approve the deal on March 5 so the deal could be completed by the end of the first quarter. He said the bank would operate as a combined unit from October.
The bank agreed in December to buy mid-tier rival Diamond Bank with cash and shares, creating a bank with 29 million customers, which the two banks have said is more than any other lender in Africa.
Wigwe said his bank would raise $250 million in tier II debt domestically and abroad to provide the bank with extra liquidity after the deal, and said Access would not need to proceed with an earlier plan to sell 75 billion naira in shares.
“We don’t think it will be necessary to raise (equity) capital,” Wigwe told an analyst call on the deal.
Under the deal, Access Bank will pay a total of 3.13 naira per share to Diamond Bank shareholders, comprising of one naira in cash and two new shares for every seven held in Diamond Bank.
Access, which has been seeking to expand, agreed to buy Diamond Bank after its rival had since 2016 struggled to bolster its capital following loan losses that had forced it to sell its foreign subsidiaries.
U.S. private equity firm Carlyle is one of the main shareholders in Diamond Bank, which has a strong focus on banking for retail customers and small businesses.
Wigwe said he expected the deal to generate savings of 150 billion naira in revenue and costs over the next three years. At least 57 branches would be closed after the deal, he added.
Shares in Access Bank rose 6.19 percent on Thursday while Diamond Bank gained 0.48 percent. – Reuters