National Bank Issues Advisory Circular to Shareholders on KCB Bid

The board of National Bank has issued an advisory circular to its shareholders to assist them to make an informed decision to either accept or reject the offer from KCB group PLC of acquiring the bank.

The circular, which has been approved by the Capital Markets Authority (CMA), includes an independent advisors’ report and an acceptance form. According to a statutory notice from National Bank published in the local dailies, the circular will be sent to all shareholders via their latest registered addresses and a copy uploaded on the company’s website.

The issuance of the circular follows the serving of a takeover document by KCB group in June. The document detailed material information from the offeror (KCB) on the bid to acquire a hundred percent (100%) of National Bank’s ordinary shares upon re-designation of the preference shares into ordinary shares.

According to the circular, the board recommends the offer to the shareholders for consideration based on several factors. In a letter to shareholders contained in the circular, the chairman to the board Mr. Mohamed Hassan partly states; “Furthermore, as previously advised to the shareholders, although NBK remains a strong bank, it requires additional capital to meet regulatory capital requirements and to grow its business, which capital can be provided by KCB.”

Ultimately, shareholders are expected to make their own decision. The board has asked them to utilize the detailed information to make a decision or seek the advice of a stockbroker, investment advisor, accountant, banker, or other professional advisors.

According to the circular, the take-over bid from KCB has outlined several predicating factors. Some of the key factors include the proposal that National Bank will continue to operate as a separate subsidiary of KCB (for two years) and therefore service delivery to its customers will remain un-interrupted. Equally, the combined balance sheets of the two banks will increase their capital capacity.

The transaction is also subject to the procurement of regulatory approvals from, amongst others, CMA, the Central Bank of Kenya, and the Competition Authority of Kenya.