The board of the National Bank of Kenya (NBK) has resigned itself to the KCB Group self valuation of the bank with no forthcoming counter offer for the distressed lender.
In a fresh circular to shareholders on Thursday July 9, 2019, NBK Board chairman Mohamed Hassan urged shareholders to ponder through KCB’s offer price of Ksh.3.80 per share in the face of a doubtful forthcoming counter offer even as the independent valuation of NBK prices the bank at Ksh.9 billion.
“The board is aware that so far, no competing offers have been received, which makes it difficult to comment on the best obtainable prices from the market. I am therefore pleased to present this opportunity to you and in case you have any doubt as to what action to take, it is recommended that you seek independent professional advice, he said.
“Although NBK remains a strong bank, it requires additional capital to meet regulatory capital and grow its business, which capital can be provided by KCB. In the circumstances, and on prudence grounds, in the absence of a responsive competing offer, the Board recommends the Offer to the shareholders for consideration,” he added.
KCB had in its initial offer price to NBK, submitted alongside its oferror’s statement to the bank on May 6, 2019 a valuation of Ksh.5.6 billion in a calculation arrived at after a 30 percent discounting of NBK’s 180-day volume weighted average share price to April 16, 2019.
NBK board however on Tuesday, disclosed NBK’s fair value, pricing the bank at Ksh.9 billion following the independent advisory of the Standard Investment Bank (SIB) in an assessment based on a combination of methods to include the lender’s historical share trading prices.
From the valuation differences, KCB Group’s offer represents a 38 percent discounting of NBK with the independently valued price of the bank pegged at Ksh.6.10 per share.
KCB Group’s takeover of NBK remains in the play having received the backing of both the National Treasury and the National Social Security Fund (NSSF)- the bride’s majority shareholders in addition to approval from the acquirer shareholders.
The transaction however remains subject to regulatory approvals from the coalition of the Competition Authority of Kenya (CAK), the Capital Markets Authority (CMA) and the Central Bank of Kenya (CBK).
Further, the deal remains in the interest of Parliament with the National Assembly Committee of Public Investments recommending the scrutiny of NBK’s books by the Auditor General in the last week.
Upon acquisition, KCB expects to run NBK as a distinct subsidiary for an initial period of two years before integrating the lender as part of its core business.
KCB would, in the inter-mediating couple of years, review the organizational structure with a means of improving the management and operations of NBK in a play out to result in the overall reduction of the bank’s workforce.
NBK shareholders have already set the acquisition of the lender by KCB on the rails, having agreed to the conditional preferential shares liquidation into ordinary shares during the lender’s Annual General Meeting on June 14, 2019.
The National Treasury now makes for NBK’s interim majority shareholder with a hold of a 66.2 percent stake in the bank presented by an accumulation of 976.2 million ordinary shares.
The pair of banks are expected to finalize the takeover transactions by the close of August later this year.
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