Access Bank May Become Nigeria's Biggest Bank If It Takes Over Diamond Bank

Nigeria’s Access Bank Plc agreed to take over struggling local rival

Diamond Bank Plc in a deal worth about $200 million that would create the nation’s biggest lender by assets.

Both companies’ shares rose.
Access will buy Diamond for 3.13 naira a share, with almost a third of that, or about $64 million, being paid for in cash and the rest in shares, the Lagos-based lenders said in statements to the Nigerian stock exchange on Monday.

That’s more than triple Diamond’s previous closing price. Carlyle Group, the U.S. private-equity firm, bought almost one-fifth of Diamond in 2014, its first-ever Nigerian deal.

Since then, the value of the stake has tanked amid an economic slowdown in the oil-driven economy that sent bad loans soaring.

The lender was downgraded by both Moody’s Investors Service and S&P Global Ratings last month to triple-C.

“The merger will be a positive for Access Bank,” Lagos-based CSL Research said in a note to clients.

“Diamond Bank has a strong retail franchise, especially on the liability side, giving it the lowest funding cost among peers.”

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If the takeover is approved, Access’s assets could swell to about $17 billion from $12.5 billion, according to Bloomberg calculations.

Zenith Bank Plc is currently the largest Nigerian lender, with $15.4 billion of assets.

The combined entity will have the largest number of of retail customers in Africa, Diamond said in a statement.

Citigroup Inc. and Chapel Hill Denham, a Lagos-based investment bank, are advising Access on the deal.

The offer is a 260 percent premium to Diamond’s closing price of 0.87 naira a share on Dec. 13. Its stock rose 9.5 percent to 1.04 naira as of 1:29 p.m. in Lagos, far below the offer price, but paring its losses this year to 31 percent.
Access climbed 9.4 percent to 8.15 naira.