This archive report was first published on 3 January 2020.
Equity Group and Atlas Mara have announced that they will review the terms of their deal after failing to sign a binding agreement. The regional lender was set to acquire four banks from the London-listed firm in Rwanda, Zambia, Tanzania, and Mozambique.
According to the parties, the deal was initially valued at Ksh10.6 billion ($106 million), with Atlas Mara set to receive Equity shares worth 6.72 percent of the regional lender's stake, valued at Ksh13.6 billion ($136 million) at the time.
However, the parties have now announced that they will renegotiate the deal, citing a divergence of fortunes between Equity and the four banks it was eyeing. Equity's share price has gained 32.5 percent since the deal was announced, while the Atlas Mara banks are making losses in aggregate.
Atlas Mara had agreed to reduce the value of the four subsidiaries by Ksh13 billion ($130 million) to reflect their weaker earnings. The banking units have a return on equity (RoE) of approximately two percent, according to previous disclosures by the multinational.
While the parties did not disclose their reasons for failing to reach an agreement, the pressure to renegotiate the deal is likely the outcome of a divergence of fortunes of Equity and the four banks it is eyeing.
