UPDATE ON IBTC/STANBIC BANK MERGER
The merger arrangement between IBTC Chartered and Stanbic Bank was the engaging issue in the nation’s capital market last week. The much awaited merger between Stanbic Bank and IBTC Chartered Bank sail through after all despite the initial unwillingness of shareholders to relinquishing their shares in the latter for the South African banking group to secure 50.1 shares of IBTC through the tender offer.
About 6.25 billion ordinary shares of IBTC Chartered currently priced at N11 per share on the stock exchange are being offered at N16 per share by way of “tender offer” to Stanbic Bank, as a result of the merger deal.Out of the shareholders’ holding of 6,530,958,957 ordinary shares in the bank that voted, 6,526,958,957 ordinary shares voted in favour of the merger, representing 99.94 per cent.Announcing the result of voting by shareholders, Chairman of IBTC Chartered Bank, Chief Olu Akinkugbe, said, a report on the result would be filed at the Central Bank of Nigeria (CBN) and the Securities and Exchange Commission for approval. He added that “once the approval is received on the scheme, a copy of the result would be submitted to the Federal High Court and if all the conditions are met, we expected the Federal High Court to sanction the merger for it to become effective.
Summary of the deal:
In September, 2006, Standard Bank of South Africa through Standard Africa Holdings Limited, signed a Memorandum of Understanding (MOU) for the proposed merger of Stanbic Nigeria and IBTC. As precondition for the deal, the transaction was structured to provide Standard Bank with a controlling stake of between 50.1 per cent and 55 per cent in the merger entity. The primary aim of the merging entities is to create one of the leading banks in Nigeria with a significant capital and asset base, offering a full range of financial products and services. It is expected that the proposed merger will leverage on the capabilities and skills of IBTC and the larger Standard Bank Group, which owns Stanbic Nigeria. Also, the capital base of the post merger IBTC should increase its competitiveness and enhance its chances of emerging as one of the leading banks in Nigeria. Stanbic will pay N50.3 billion to IBTC shareholders. This amount which excludes regulatory charges borne by Standard Bank is said to be the largest shareholders payout in the history of the Nigerian capital market.
How the Merger was Structured:
Standard Bank offered to buy the shares at N16 per share which is a 45 per cent premium to the market price of N11 a share. The tender offer price of N16 also represents a premium of 278 per cent to IBTC’s share price of N5.76 recorded September 22 2006, the date the MOU for the merger deal was signed. The promoters of the deal want the market to believe that the price is well in excess of the average percentage increase in the share prices of many banks over the same period. IBTC at present has 12.5 billion issued shares held by various individuals and institutional shareholders. Under the terms of the merger, 6.250 billion newly issued shares of IBTC shares will be allotted to Standard Bank in exchange for the transfer of Stanbic into the merged entity. This translates into 33.3 per cent stake for Standard Bank in post-merger IBTC. Accordingly, Standard Bank requested that every IBTC shareholder should tender one out of every three shares they own. This will ensure that there are sufficient tendered shares for it to achieve the minimum target of 3, 143, 750, 000 shares, which will give it the desired 50.1 per cent shareholding in IBTC.
About 6.25 billion ordinary shares of IBTC Chartered currently priced at N11 per share on the stock exchange are being offered at N16 per share by way of “tender offer” to Stanbic Bank, as a result of the merger deal.Out of the shareholders’ holding of 6,530,958,957 ordinary shares in the bank that voted, 6,526,958,957 ordinary shares voted in favour of the merger, representing 99.94 per cent.Announcing the result of voting by shareholders, Chairman of IBTC Chartered Bank, Chief Olu Akinkugbe, said, a report on the result would be filed at the Central Bank of Nigeria (CBN) and the Securities and Exchange Commission for approval. He added that “once the approval is received on the scheme, a copy of the result would be submitted to the Federal High Court and if all the conditions are met, we expected the Federal High Court to sanction the merger for it to become effective.
Summary of the deal:
In September, 2006, Standard Bank of South Africa through Standard Africa Holdings Limited, signed a Memorandum of Understanding (MOU) for the proposed merger of Stanbic Nigeria and IBTC. As precondition for the deal, the transaction was structured to provide Standard Bank with a controlling stake of between 50.1 per cent and 55 per cent in the merger entity. The primary aim of the merging entities is to create one of the leading banks in Nigeria with a significant capital and asset base, offering a full range of financial products and services. It is expected that the proposed merger will leverage on the capabilities and skills of IBTC and the larger Standard Bank Group, which owns Stanbic Nigeria. Also, the capital base of the post merger IBTC should increase its competitiveness and enhance its chances of emerging as one of the leading banks in Nigeria. Stanbic will pay N50.3 billion to IBTC shareholders. This amount which excludes regulatory charges borne by Standard Bank is said to be the largest shareholders payout in the history of the Nigerian capital market.
How the Merger was Structured:
Standard Bank offered to buy the shares at N16 per share which is a 45 per cent premium to the market price of N11 a share. The tender offer price of N16 also represents a premium of 278 per cent to IBTC’s share price of N5.76 recorded September 22 2006, the date the MOU for the merger deal was signed. The promoters of the deal want the market to believe that the price is well in excess of the average percentage increase in the share prices of many banks over the same period. IBTC at present has 12.5 billion issued shares held by various individuals and institutional shareholders. Under the terms of the merger, 6.250 billion newly issued shares of IBTC shares will be allotted to Standard Bank in exchange for the transfer of Stanbic into the merged entity. This translates into 33.3 per cent stake for Standard Bank in post-merger IBTC. Accordingly, Standard Bank requested that every IBTC shareholder should tender one out of every three shares they own. This will ensure that there are sufficient tendered shares for it to achieve the minimum target of 3, 143, 750, 000 shares, which will give it the desired 50.1 per cent shareholding in IBTC.
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