Equity says Sh10bn buyout of regional banks to be delayed

Equity Bank chief executive James Mwangi. FILE PHOTO | NMG 

By BRIAN NGUGI
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Summary

• Equity Bank in January informed its shareholders that a binding agreement for the proposed Sh10.7 billion share swap deal with Atlas Mara Ltd had lapsed after it failed to reach a buyout deal within the set deadline.
• The move opened the way for the parties to walk away from the transaction.
• Equity Bank, however, said talks on the deal would continue and possibly conclude later this year.

Equity Group’s purchase of four banks in Rwanda, Zambia, Mozambique and Tanzania from a London-listed investment firm will now delay further, the bank has said.

The bank in January informed its shareholders that a binding agreement for the proposed Sh10.7 billion share swap deal with Atlas Mara Ltd (ATMA) had lapsed after Equity Bank failed to reach a buyout deal within the set deadline.

The move opened the way for the parties to walk away from the transaction. Equity Bank, however, said talks on the deal would continue and possibly conclude later this year.

On Thursday Equity Group chief executive James Mwangi told Business Daily that while discussions were still ongoing, the conclusion of the talks would be affected by further delays. “As announced by the parties in January, discussions continue,” Mr Mwangi said in interview. “However, as a practical matter the parties no longer expect to be able to conclude such discussions in the early part of 2020. The parties will update the markets should this situation change.”

In his January notice to shareholders, Mr Mwangi had said the two parties had failed to agree on initial terms but committed to reaching a deal early this year.

In the Atlas share swap deal Equity was to get 62 percent of the share capital of Rwanda’s Banque Populaire du Rwanda and 100 percent of African Banking Corporation of Zambia, African Banking Corporation Tanzania and African Banking Corporation Mozambique.

In exchange, Atlas Mara was to get shares equivalent to a 6.72 percent stake in Equity Bank valued at Sh10.9 billion. Atlas Mara had earlier informed the London Stock Exchange (LSE) that it marked down the value of the four banks after the Equity Bank deal prompted a due diligence on their financial health.

The London-listed firm sees the transaction as an opportunity to take a stake (6.27 percent) in Equity, which is one of the most profitable banks in the region, and generates steady dividends and capital gains from share appreciation ay the Nairobi Securities Exchange.

Equity Group plans to expand into 15 nations on the continent by 2026, from six markets, to benefit from rising regional trade and the increased use of digital banking services.