KCB offers to buy out National Bank of Kenya

Thursday April 18 2019

KCB Chief Executive Officer Joshua Oigara. PHOTO | FILE | NATION MEDIA GROUP

KCB Chief Executive Officer Joshua Oigara. PHOTO | FILE | NATION MEDIA GROUP  

PAUL WAFULA
By PAUL WAFULA
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PATRICK ALUSHULA
By PATRICK ALUSHULA
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The Kenya Commercial Bank has offered to buy out the National Bank of Kenya.

The deal will see Kenya’s biggest bank by asset base become the biggest lender in the region.

The lender said on Thursday it had made an offer to acquire 100 percent of the ordinary shares of NBK.

Both KCB and NBK are listed on the Nairobi Securities Exchange (NSE).

"KCB proposes to make the acquisition through a share swap of 10 ordinary shares of NBK for every 1 ordinary share of KCB," the bank said in a statement

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

CONFIRMS SPECULATION

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 percent of NBK shares, KCB will apply to Capital Markets Authority (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.

HALT TRADING

Both firms are listed at Nairobi Securities Exchange (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.”

EXPANSION STRATEGY

KCB chief executive Joshua Oigara said the transaction fits within the lender's expansion strategy and gives it a stronger edge to play a bigger role in driving the financial inclusion agenda in the East African region while building a robust and financially sustainable organisation.

“The proposed transaction will further consolidate the banking sector in Kenya and will create stronger institutions enabling KCB to play a bigger role in the financial inclusion agenda. The acquisition would accelerate the Group’s growth ambitions and enhance value to all stakeholders,” said Mr. Oigara.