This archive report was first published on 10 July 2019.
Kenya Commercial Bank (KCB) Group has made a takeover bid for National Bank of Kenya (NBK) at a price of KSh 5.6 billion. The offer, made on June 19, 2019, values NBK at one share for every 10 of its shares.
However, the NBK board has expressed reservations about KCB's valuation, stating that it falls below the expected range. In a circular issued to stakeholders, the board noted that the offer made by KCB is below the fair valuation share, which should be one KCB share for every 6.32 NBK shares.
According to the circular, approved by the Capital Market Authority (CMA), the NBK board is aware that the offer made by KCB falls below the expected valuation range. However, the board is also aware that no competing offers have been received, making it difficult to comment on the best obtainable prices from the market.
The board has proposed that NBK will continue to operate as a separate subsidiary of KCB for two years in the takeover process, to avoid interrupting service delivery to its customers.
Reservations raised by the board regarding KCB's valuation could delay or even derail the takeover if the stakeholders agree with the directors. However, the stakeholders will have to make a decision independent of the board, though the decision may also be informed by the advisory from the directors.
The two lenders are expected to conclude the takeover negotiations and any pending transactions by October 2019. As of 2018, KCB's assets were valued at KSh 714.3 billion, while NBK had assets worth KSh 114.8 billion.
