Access Takes Over Diamond Bank
- Pursues acquisition with N23.160 billion offers
Shareholders of Diamond Bank Plc have demanded an investigation into the financial institution’s “merger” with Access Bank Plc. The deal worth over N23.160 billion cash consideration will see to shareholders of Diamond Bank getting N1 per share.
Yesterday, Diamond Bank affirmed its submission to the powers of Access Bank, describing the relationship as a union that would create Nigeria’s and Africa’s largest retail bank by customer-base.
According to the chief executive officer of Diamond Bank, Uzoma Dozie, the consolidation in the Nigerian banking industry is an inevitable and natural progression. “There is clear strategic rationale for the proposed merger and strong complementarity between the two institutions,” he said.
The chief executive officer of Access Bank, Herbert Wigwe, on his part, noted: “Access Bank has a strong track-record of acquisition and integration and has a clear growth strategy. We have a strong financial profile with attractive returns and a robust capital position with 20.1 per cent Capital Adequacy Ratio as at September 30, 2018.
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“We believe that this platform, together with the two banks’ shared focus on innovation, financial inclusion and sustainability, can bring benefits to Access Bank and Diamond Bank customers, staff and shareholders.”
In his reaction, the founder of Independence Shareholders Association of Nigeria, Sunny Nwosu, described the move as a step in the right direction, especially when compared with the Skye Bank case. What Access Bank needs now is to authenticate the deal by holding an extraordinary general meeting of its shareholders once all the regulatory processes are completed, he said.
“What we want to hear is how they will administer such a big institution. This is better than what the Nigerian Deposit Insurance Corporation, Asset Management Corporation of Nigeria, and Central Bank of Nigeria are doing. It is a quoted company versus a quoted company. This shows that it is a peaceful transaction,” he said.
The chief research officer, Investdata Consulting Limited, Ambrose Omodion, further described it as “a good deal for holders of Diamond Bank shares. With the acquisition, Access Bank is to pay Diamond Bank’s shareholders N1 per share, plus two units of its shares for every seven units of Diamond Bank’s shares.”
A financial and investment analyst, Johnson Chukwu, was skeptical about the use of the key word defining the deal. “It is not believable to say that the deal is a merger when Access Bank is offering N3.13 per share of Diamond Bank, which traded at N0.95 last Friday and appreciated to N1.04 yesterday after the announcement of the merger.
“If one party is paying the other in cash consideration, by buying the other’s shares, it cannot be merger, but clearly an acquisition. Basically, they will use a term that will appear positive to the investing public and customers,” he said.
In March 2012, Access Bank completed the acquisition of Intercontinental Bank after all relevant regulatory, judicial and shareholder approvals had been granted, a move many observers dubbed “aggressive”.
Speaking on the merger, the erstwhile group managing director/chief executive officer of Access Bank Plc, Aigboje Aig-Imoukhuede, said: “The conclusion of this transaction is a significant step forward for the Nigerian banking sector; it has preserved thousands of Nigerian jobs, protected the savings of millions of citizens and laid the foundation for the creation of a truly great, African bank.”