Habib Bank shareholders get 2.6pc discount on DTB shares

Habib Bank owners will enjoy a 2.6 per cent discount on Diamond Trust Bank (DTB) #ticker:DTK shares after shareholders approved the share swap acquisition of the Kenyan branch of the Pakistani-based lender.

DTB plans to issue Habib Bank Kenya owners 13.28 million shares priced at Sh137.39 apiece, valuing the deal at Sh1.82 billion.

“We’re excited to receive shareholder approval because we’ve been waiting to finalise this deal for some time now,” said DTB chief executive Nasim Devji at the bank’s annual general meeting held on Thursday.

“This will augment our position as a top-tier lender, increase our market share, and acquire Habib’s niche market of SMEs,” said Ms Devji in an interview.

The Sh137.39 price per share offered to Habib owners was based on DTB’s volume-weighted prices for a period of 180 days to January 31, 2017 when the takeover deal was signed.

DTB share Thursday rose by three shillings to close at Sh141 a piece. The deal now awaits regulatory approval from the anti-trust agency, the Central Bank of Kenya and the Capital Markets Authority.

READ: DTB buys Habib Bank for Sh1.8bn in share swap deal

The price of Sh1.82 billion means DTB bought Habib at 0.98 times its book value, implying a discounted price.

Habib Bank made an after-tax profit of Sh236 million as at end of September 2016. With the transaction, DTB is set to acquire a loan book of Sh4.3 billion.

DTB and Habib are related in terms of common shareholding. Habib already owns 11.87 per cent of DTB, and with this deal the holding will go up to 16.15 per cent.

Other shareholders of DTB will, however, see their stakes diluted by of 4.75 per cent.

The Karachi-based Habib Bank is listed on the Pakistan Stock Exchange and is 51 per cent controlled by Aga Khan Fund for Economic Development.