The Surprising New Math of Acquisition of Banks in Nigeria The Skye Bank Case - Proshare
Further to the formal announcement of the bid winners and the signing of agreements, Skye Bank Plc is reported to have paid the mandatory deposit of 20 per cent for the acquisition of Mainstreet Bank. The balance 80 per cent to conclude the transaction is now due for payment on November 03, 2014 as reportedly contained in the signed Share Sale and Purchase Agreement (SPA)‎
The New Acquisition Maths
Time to check a few assumptions at the door:
1. The serious funding hurdles facing Skye Bank Plc to make full payment of the bid price;
2. An Equity Raise has not been approved by the Skye Bank Plc shareholders and as a PLC they can't/should not proceed without an EGM being held;
3. Using an SPV (as done by Heritage which is not a PLC) is not in line with their bid and should not be allowed as it is against the SEC rules and unfair to other bidders (amounts to a change of the rules after bid closure), distorts the bid review and also places its existing shareholders at a disadvantage.
What will be a credible defence/way out by/for Skye Bank Plc? - Not any viable option from the analysis above, BUT if they say they are looking at an outside equity funding or what the rumour mill calls an OFF BALANCE SHEET TRANSACTION, it will substantially dilute the current shareholders, which in the main, has not been approved by their shareholders and regulators.
If they however opt for a debt option this will be outside the banks current Tier 2 Capacity.
What options are there for AMCON, SEC and the CBN under the scenario? The combined regulators have to ensure that the integrity of the process is respected and that Skye Bank Plc complies with regulations in trying to conclude the deal. If all fails, they can revert to the reserve bidders and subject them to the same level of scrutiny. If this fails, they now have a proper template for engaging future bidders on such a regulatory bound acquisition.
Mr Proshare are u serious?
And the researcher never thought AMCON put all this facts into consideration before choosing Skye bank. :willy: