Africa’s top banking group by assets, Standard Bank, has received approval to merge its Stanbic Nigeria unit with IBTC Chartered Bank, the firm said on Monday.
Standard Bank said it had increased its offer price to 16 naira per share from 11,74 naira per IBTC share, valuing the offer at $400-million.
Coronation portfolio manager Neville Chester said while Nigeria was an integral element to the group’s pan-African plans, the offer increase raised some concern.
”The fact that they increased the offer is a bit of a concern but I think there are huge growth possibilities in Nigeria,” Chester said.
In terms of the proposed transaction, Standard Bank said it would merge Stanbic Nigeria with IBTC in exchange for 6,25-billion IBTC shares.
Standard Bank spokesperson Kim Howard said the reason behind the group’s decision to up its offer was the performance of banking stocks on the Nigerian Stock Exchange from March to early July.
”It [the higher offer] was mostly because of the performance of the Nigerian banking sector, which from March 20 to July 5 rose 34%,” Howard added.
Standard Bank first revealed the merger talks in September.
IBTC Chartered — a medium-sized bank with an emphasis on investment banking — has total assets of $1,1-billion and a network of 56 branches across Nigeria. The Nigerian bank merged with Chartered Bank and Regent Bank in December 2005.
Howard said a company could not have a pan-African strategy without exposure to the Nigerian market.
”If you are going to have a pan-African strategy, you have to include Nigeria,” she said.
Nigeria concluded an 18-month consolidation of its financial sector in December in which 89 individual banks shrank to 25 banking groups.
The IBTC deal marked Standard Bank’s third attempt to buy into the fast-growing Nigerian market in three years, after a planned merger of Stanbic with Oceanic Bank failed earlier this year and plans to buy a stake in Afribank in 2003 never materialised. — Reuters