South Africa’s Nedbank is guaranteed to secure a controlling stake of at least 51.17 percent in NCBA Group after receiving additional acceptances from top shareholders of the Kenyan bank.
Nedbank, which has offered to buy a 66 percent stake in NCBA through a cash-and-stock deal, had earlier received commitments from major investors in the Nairobi Securities Exchange-listed firm with a combined ownership of 71.2 percent.
This meant that it was certain to acquire at least 46.992 percent in NCBA –based on the rule allowing each investor to tender 66 percent of their holdings— even if the rest of the shareholders snubbed its offer.
Nedbank now says that the group of investors from which it has received acceptances has grown to represent an aggregate ownership of 77.54 percent in NCBA, enabling them to sell a 51.17 percent stake in the lender independent of the decisions of other shareholders.
“Nedbank is pleased to advise the general investing public and NCBA’s shareholders that it has secured additional irrevocable undertakings … such that the aggregate of all irrevocable undertakings … has increased to 77.54 percent (from 71.2 percent) of the total number of NCBA shares,” the South African firm said in a public notice.
The development has guaranteed Nedbank a controlling stake in NCBA which it will consolidate as a subsidiary.
Nedbank is likely to raise its stake further in the proposed transaction from acceptances by other investors and an option allowing NCBA shareholders to sell more than 66 percent of their holdings once this window is opened.
The South African bank said it has also received an exemption from the Capital Markets Authority (CMA) from having to make a mandatory take-over offer to all shareholders of NCBA, fulfilling a key condition in the deal.
Small investors will get a higher buyout price of Sh105 per share in the transaction in which high-net-worth investors will get a cash price of Sh21 per share and the rest of the value in Nebank stock.
NCBA investors can tender 66 percent of their shares. Out of this pool of shares, 80 percent of the units will be converted into Nedbank shares at a rate of 4.02994 shares for each 100 shares.
The Nedbank shares are priced at 250 rands (Sh2,010) in the transaction.
The remaining 20 percent of the shares will be bought in cash at a rate of Sh2,100 for each 100 shares.
Nedbank notes that those whose holdings are not large enough to secure them at least 200 Nedbank shares will only receive a higher cash price of Sh105 per share for the stocks they will have tendered.
NCBA investors with less than 9,400 shares will not qualify for the cash-and-stock deal, limiting them to take their compensation in cash.
The move to offer a higher all-cash offer to small investors is seen as making it easier for them to realise the value of their shares.
Converting a small portfolio of NCBA shares into Nedbank stock is likely to be uneconomical. Unlike the top NCBA investors who have committed to sell their shares to Nedbank, many retail shareholders may also not be willing to invest in the South African bank.
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