This archive report was first published on 10 July 2019.
Kenya Commercial Bank's (KCB) bid to acquire National Bank of Kenya (NBK) at Ksh3.8 per share has raised concerns among NBK shareholders and pensioners. The proposal, which was announced on July 10, 2019, could result in a 30% loss of share value for NBK shareholders if it is successful.
According to an independent evaluation report commissioned by the NBK board, the offer price of Ksh3.8 per share undervalues the company by almost 38%. The board has urged its shareholders to advise it on whether to freeze the offer or give it the nod.
The KCB offer values NBK at Ksh5.6 billion, which is significantly lower than the Ksh9 billion valuation put forward by an independent valuation report. The NBK board has cautioned that it may be forced to proceed with the KCB offer since no strategic investor has shown interest in acquiring the financially troubled lender.
If the shareholders approve the offer, the deal will now be at the mercy of the Competition Authority of Kenya, the Capital Markets Authority, and the Central Bank of Kenya.
NBK, which was established in 1968, is 48.1% owned by the National Social Security Fund and 22.5% owned by the National Treasury. The public owns the remaining shares.
Three years ago, pensioners successfully opposed the government's proposal to sell part of the bank to a strategic investor to ease its financial constraints.
