Equity Bank, Atlas Mara Share Swap Deal in Stalemate

By Modupe Gbadeyanka

Foremost East African lender, Equity Group Holdings Plc (formerly Equity Bank Group), has announced that its proposed share swap deal with one of the major shareholders of Nigeria’s Union Bank Plc, Atlas Mara Limited, has still not yielded the expected results.

In a notice to the Nairobi Securities Exchange (NSE) in Kenya on Tuesday, Equity Group, which is one of the most profitable banks in the region, confirmed that “as of the date of this announcement, the parties have yet to sign detailed transaction agreements and the Binding Term Sheet has expired.”

However, the disclosure, signed by the GMD/CEO of Equity Group, Mr James Mwangi, stressed that both parties are expected to “continue further discussions in early-2020 to try to reach mutually acceptable commercial terms with respect to the Proposed Transaction, or a variant of it,” further emphasising that. “There is currently no certainty that a transaction will materialise.”

Business Post gathered that Equity Group had initially agreed to exchange certain banking assets of Atlas Mara in four countries (Rwanda, Zambia, Tanzania and Mozambique) for 6.27 percent stake (about 252,482,300 shares) in Equity Group worth $109 million. This pre-contractual agreement was announced on Monday, April 29, 2019.

Under the binding term sheet, Equity Group proposed to acquire 62 percent of the share capital of Banque Populaire du Rwanda Plc (BPR); 100 percent of the share capital of African Banking Corporation Zambia Limited; 100 percent of the share capital of African Banking Corporation Tanzania Ltd; and 100 percent of the share capital of African Banking Corporation (Mozambique).

But the December 31, 2019 statement said both had been unable to finalise the deal, which was “subject to completion of confirmatory due diligence, the entering of detailed transaction agreements and obtaining regulatory and shareholder approvals.”

But it promised to make further announcements upon conclusion of any fresh binding transaction agreements, stating that until more updates regarding the proposed transaction are made, its shareholders and other investors are advised to exercise caution when dealing in its stocks on the NSE the Uganda Securities Exchange and the Rwanda Stock Exchange.

Equity Group said it “remains committed to its strategic objective of expanding its footprint in Africa to provide access to competitive, tailored financial services to improve people’s lives and livelihoods whilst also delivering significant value to its stakeholders and to its vision of building sub-Saharan Africa’s premier financial institution through delivering innovative products and services to customers, including, in particular, the effective use of technology.”