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Habib owners to gain 9pc on DTB share after buyout

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Habib Bank branch on Koinange Street in Nairobi. FILE PHOTO | NMG

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Summary

  • DTB aims to complete the acquisition of Habib Bank by July 21, paying the smaller lender’s owners Sh1.82 billion through an allotment of 13.28 million DTB shares priced at Sh137.39 each.
  • Should there be a 50 per cent or more variation between the agreed price and the average trading price of DTB share for the six month period to July, the two parties would be obliged to renegotiate the pricing of the new shares.
  • Following the completion of the deal, DTB will integrate the Habib’s operations into its systems in six to nine months.

Habib Bank owners will gain a nine per cent premium on Diamond Trust Bank #ticker:DTK shares compared to the prevailing price once the takeover deal by the tier one lender goes through.

DTB aims to complete the acquisition of Habib Bank Limited by July 21, paying the smaller lender’s owners Sh1.82 billion through an allotment of 13.28 million DTB shares priced at Sh137.39 each.

“The new shares have been determined by dividing the consideration of Sh1.82 billion by the price of Sh137.39 per share,” said DTB in a circular to its shareholders.

DTB shares are currently priced at Sh126 each.

However, should there be a 50 per cent or more variation between the agreed price and the average trading price of DTB share for the six month period to July, the two parties would be obliged to renegotiate the pricing of the new shares.

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 in their respective shareholding percentages.

DTB shareholders are expected to ratify the deal at their annual general meeting on May 25, with the new shares slated to begin trading at the Nairobi bourse on July 31.

Following the completion of the deal, DTB will integrate the Habib’s operations into its systems in six to nine months, it said in the shareholder circular.

Habib’s market share stood at 0.34 per cent last year, with five branches and a workforce of 53 employees.

DTB’s market share stood at 6.1 per cent with 61 branches across the country. It is expected to grow its this share by 0.3 per cent following the Habib acquisition.

In 2016, DTB reported a net profit of Sh7.7 billion, representing a 17 per cent increase from 2015. Habib reported a 2.5 per cent increase in its net profit for 2016 to Sh306.2 million.