This archive report was first published on 3 January 2020.
On January 3, 2020, Equity Group and Atlas Mara announced that they would review the terms of their deal, which was initially set to see the Kenyan lender acquire four banks in Rwanda, Zambia, Tanzania, and Mozambique.
The deal, which was announced in April 2019, would have seen Atlas Mara receive Equity shares worth Sh13.6 billion, equivalent to a 6.72 percent stake in the Kenyan lender.
However, the parties have now announced that they have not signed a binding agreement, citing undisclosed reasons, and that their continued negotiations will likely result in a change of the deal terms.
According to Atlas Mara, while there is no assurance that the potential transaction will be concluded on the terms previously announced, the parties continue to be engaged in discussions.
The pressure to renegotiate the deal is likely the outcome of a divergence of fortunes of Equity and the four banks it is eyeing. Equity's prospects have brightened with the recent removal of lending rate controls, causing its share price to gain 32.5 percent since the deal was announced.
On the other hand, the Atlas Mara banks are making losses in aggregate, with a return on equity (RoE) of approximately two percent, according to previous disclosures by the multinational.
