KCB says the deal will be completed by creating and issuing new 147.3 million shares to NBK’s investors.
At Sh4.19 per share, the deal represents a 25.7 per cent discount to NBK’s average share price of Sh5.64 over the same period.
It is, however, a small premium to NBK’s closing price of Sh4 Thursday but also a discount to the lender’s book value per share of Sh4.7 as of December.
KCB Group #ticker:KCB has disclosed that it will acquire each share of National Bank of Kenya (NBK) #ticker:NBK at Sh4.19, a significant discount to the capital-starved lender’s book value and market value.
In a circular to shareholders, KCB says the deal will be completed by creating and issuing new 147.3 million shares to NBK’s investors, taking into account the two banks’ average share price in the 180 trading days ending mid-March.
KCB’s share price averaged Sh41.9 over the period, according to Reuters data. This values the transaction at Sh6.1 billion, equivalent to Sh4.19 for each NBK share including the units that will emerge from converting the lender’s preferred shares into ordinary stock.
At Sh4.19 per share, the deal represents a 25.7 per cent discount to NBK’s average share price of Sh5.64 over the same period. It is, however, a small premium to NBK’s closing price of Sh4 Thursday but also a discount to the lender’s book value per share of Sh4.7 as of December.
KCB’s share price closed at Sh36.4 Thursday, meaning that the deal is referenced to a time when the stock of the country’s biggest bank had more buying power.
“The swap ratio has been determined on the basis of … a book discount to the value of NBK’s 180 day volume weighted average price up to and including March 16, 2019 (the date before the KCB Group board approval of the proposed offer) of one NBK share on the NSE to factor the limited enterprise value of NBK in its current financial state,” KCB said in the circular.
Higher returns
KCB chief financial officer Lawrence Kimathi told the Business Daily that NBK’s shareholders will recover the discount and make even higher returns once they become shareholders in the country’s biggest bank.
NBK’s chief executive Wilfred Musau said that the lender’s board will study KCB’s offer and respond in due course.
Taking shares in KCB is expected to enable NBK’s shareholders, including the government and the NSSF, to ride on KCB’s economies of scale that has delivered billions of shillings in earnings and dividends.
KCB’s chief executive Joshua Oigara said in a recent interview that the lender is in a position to absorb NBK without raising additional capital.
“We have surplus capital and we don’t see the need to take new capital for the next few years. We will maintain our dividend payout ratio of 50 per cent,” he said.
PAYE Tax Calculator
Note: The results are not exact but very close to the actual.
