Nairametrics confirms that a merger deal between Access Bank Plc and Diamond Bank will be announced on or before Close of Business Monday, December 16th, 2018.
Nairametrics had earlier postulated on how a possible merger between both banks might go through.
From denial to reality
Just a few weeks back rumors emerged of a possible merger between the two banks. The shock reverberated through the financial services sector until both banks issued independent statements denying any merger.
However, several sources with knowledge of the deal inform Nairametrics that negotiations had ensued despite multiple denials. Shareholders have thus been misled about this deal.
Why this deal?
The impetus for this deal is not immediately clear however several analysts spoken to by Nairametrics suggest it could be either of two reasons.
Firstly, it appears this may have been triggered by unpaid loans between the Dozie family and Access Bank which is likely not performing. Any deal short of an acquisition may have thus negatively impacted on the loans thus the need for the takeover.
Another reason posited by analysts suggest this deal was an opportunity for Access Bank to be the largest bank in Nigeria by Asset Base. In terms of profitability and returns on equity, Access Bank is behind GT Bank and Zenith Bank.
Regulatory Oversight
Despite the impending announcement, regulators, CBN and SEC will still have to approve this transaction. This process could take weeks if not months assuming shareholders of both banks comply with regulatory requirements. Critics of this merger already point to potential procedural breaches.
Shareholders approval
More headwinds lie ahead for both banks as they still require shareholder approval to consummate the transaction. For this deal to be consummated, shareholders of both banks will have to approve it with the sponsors of the merger abstaining.
Sources suggest there might be push back on the Diamond Bank side of the deal as its majority shareholder Carlyle investment may have felt shortchanged. Carlyle had offered to bail out the bank but this request was rejected by the Dozie family after they requested for the resignation of Uzoma Dozie the CEO of Diamond Bank.
While a potential Access Bank acquisition/merger with Diamond Bank could still lead to the resignation of Uzoma Dozie, we understand the Dozies will keep a significant portion of their shareholding of the bank giving them a seat on the board of the bank. (Nairametrics)
