Diamond Bank Plc’s acquisition by Access Bank Plc is official.
Diamond Bank’s Chief Executive Officer Uzoma Dozie announced that the bank’s board had selected Access Bank as the preferred bidder for a potential merger.
But the deal will come at a heavy cost to the Diamond Bank management team, especially on job security. The management team is likely to be disbanded.
“You cannot have two managing directors of a bank, domestic and foreign operations and even chief financial officers in one bank. One has to give way and the Diamond Bank staff will be the casualties. The Diamond Bank management team should know that their jobs are gone,” former General Manager Richard Obire said.
According to him, Access Bank is a very ambitious lender and that is one of the characteristics of its management team.
Obire said: “They want to be big, and perhaps, the biggest bank in Nigeria and that was presented to them on a platter of gold by the Diamond Bank opportunity. Diamond Bank is now a small bank compared to its peers. It is now a tier-3 bank. I do not know the terms of the transaction but they will lose their brand name.
“It is the reality of business. Diamond Bank has such a brilliant brand name and customer base and these are what Access Bank will inherit. The name Diamond Bank is gone forever and the next will be integration, which will lead to exit of the bank’s management team.”
An industry source told The Nation that Access Bank’s decision to acquire Diamond followed a presentation made to it last week by its financial advisers in London, which showed huge strengths inherent in Diamond Bank.
The board of Diamond Bank Plc yesterday finally announced its merger with Access Bank Plc.
Both banks recently denied The Nation’s exclusive report of November 12 on any merger plans.
In the report, this paper exclusively said: “It was gathered that both financial institutions have reached an agreement in broad terms on the acquisition. What is left is the valuation of assets, with a view to determining the level of compensation and systems’ integration, the sources said, pleading not to be named because they are not allowed to talk to the media on the matter.
“It was learnt that the development leading to the impending acquisition was triggered by Diamond Bank directors who approached Access Bank for intervention in a bid to stave off a possible regulatory intervention that could lead to the withdrawal of the lender’s operating licence in the light of the bank’s depleting capital adequacy ratio on account of a huge Non Performing Loans (NPLs) portfolio put at over N150 billion.”
Dozie said the potential merger of the two banks would create Nigeria and Africa’s largest retail bank by customers.
He added that the transaction to be completed in the first half of 2019 was in the best interest of all stakeholders.
Dozie said the completion of the merger was subject to certain shareholder and regulatory approvals.
He said: “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 N1 per share in cash.”
Dozie also said the transaction would include the allotment of two new Access Bank ordinary shares for every seven Diamond Bank ordinary shares held as at the implementation date.
“The offer represents a premium of 260 per cent to the closing market price of 87k per share of Diamond Bank on the Nigerian Stock Exchange (NSE) as of Dec. 13, 2018, the date of the final binding offer,” Dozie said.
He said the bank’s shares would be absorbed into Access Bank at the completion of the merger and Diamond Bank would cease to exist under Nigerian law.
“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.
“The board of Diamond Bank believes that the proposed combination of the two operations provides an exciting prospect for all stakeholders in both businesses,” he said.
Access Bank Chief Executive Officer Herbert Wigwe said: “Access Bank has a strong track record of acquisition and integration and has a clear growth strategy.
“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.
“This could accelerate our strategy as a significant corporate and retail bank in Nigeria and a Pan-African financial services champion.”