Nigeria's Access Bank to buy Diamond Bank

The deal is said to create Nigeria's largest retail bank by customers.

Nigeria’s Access Bank said it signed a memorandum of understanding with its rival, Diamond Bank, for a potential merger of the two commercial banks that will create Nigeria’s largest retail bank by customers.

The proposed merger, which is valued at nearly $200 million, would involve Access acquiring the entire issued share capital of Diamond in exchange for a combination of cash and shares in Access.

The deal will see Access buy Diamond for 72.5 billion naira ($199 million), with almost a third of this amount being paid for in cash and the rest in shares.

Access said Diamond shareholders will receive N3.13 per share in total for the deal, which is still subject to formal regulatory and shareholder approvals. The offer to shareholders is a 229 percent premium to Diamond’s closing share price of 0.95 naira a share on December 17.

Herbert Wigwe (pictured), the CEO of Access, said Access and Diamond have complementary operations and could accelerate its strategy of being a significant corporate and retail bank in Nigeria.

“We believe that this platform, together with the two banks’ shared focus on innovation, financial inclusion and sustainability, can bring benefits to Access and Diamond customers, staff and shareholders,” said Herbert in a statement.

Uzoma Dozie, the CEO of Diamond Bank, said in a statement: “The board of Diamond Bank believes that the proposed combination of the two operations provides an exciting prospect for all stakeholders in both businesses and will create a financial institution with the scale, strength and expertise to capitalise on the significant opportunities in Nigeria and sub-Saharan Africa more broadly.”

Citigroup and Chapel Hill Denham, a Lagos-based investment bank, are advising Access on the deal while Exotix Partners LLP is advising Diamond.