South Africa’s Nedbank Group Limited has formally tabled a multibillion-shilling bid to acquire a controlling stake in NCBA Group Plc.
The proposed transaction, which values the targeted stake at about Ksh110 billion based on the offer terms, would see Nedbank acquire effective control of NCBA while retaining a substantial public float on the Nairobi Securities Exchange (NSE).
In a public notice on Monday, February 9, NCBA informed shareholders and the investing public that Nedbank had served it with an Offeror’s Statement outlining the structure, conditions and strategic rationale of the proposed deal.
The offer is structured as a partial pro rata acquisition rather than a full takeover, subject to regulatory approvals in Kenya and other jurisdictions.
NCBA said Nedbank intends to acquire approximately two-thirds of the bank through a share-based and cash consideration extended to existing shareholders.
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"Nedbank intends to make a partial pro rata offer to acquire approximately 1,087,362,891 ordinary shares (par value of Ksh5 each) (Offer Shares), constituting approximately 66 per cent of the issued share capital of NCBA (NCBA Shares) from its existing shareholders (NCBA Shareholders) (Offer)," the notice read.
NCBA explained that the offer would allow shareholders to tender up to 66 per cent of their holdings, with limited scope to tender excess shares depending on final allocations.
"The Offer will be implemented on a partial pro rata basis, such that NCBA Shareholder will be entitled to tender up to 66 per cent of the shareholding with the opportunity to tender excess shares subject to satisfying compliance with the terms of the Offer document," the notice added.
Under the proposal, shareholders who accept the offer will receive a mix of Nedbank shares and cash, with equity forming the bulk of the consideration.
"The consideration payable under the Offer for every 100 NCBA Shares tendered and accepted (adjusted to a pro rata basis as required) will comprise: (a) 80% of the consideration, settled through the issue of 4,099,494 ordinary shares in Nedbank; and (b) 20% of the consideration, settled in cash in the amount of KES 2,000,000 (Cash Portion)," the notice continued.
NCBA further disclosed the pricing basis for the Nedbank shares to be issued, anchoring the valuation to South African market prices and prevailing exchange rates.
"The Nedbank ordinary shares (Nedbank Shares) to be issued pursuant to the Offer will be issued at a price of ZAR 250.00 per Nedbank Share, determined by applying the KES/ZAR spot exchange rate of 7.7143 as at the close of business in South Africa on 18 December 2023," the notice further read.
The announcement noted that not all shareholders will receive Nedbank shares, with certain categories instead receiving cash-only consideration.
"All NCBA Shareholders who accept the Offer will receive the portion of the consideration payable under the Offer other than the Cash Portion in the form of Nedbank Shares, except the following cases… NCBA Shareholders who, upon acceptance of the Offer, would be entitled to receive fewer than 200 Nedbank Shares, in which case such shareholders will receive their full consideration in cash," the notice explained.
Further, to allow the transaction to proceed as a partial acquisition, Nedbank has sought regulatory relief from Capital Markets Authority (CMA).
NCBA said the exemption request is grounded in strategic considerations, including maintaining local shareholding and aligning the investment with long-term operational support.
"Nedbank has applied to the Capital Markets Authority (CMA) pursuant to the provisions of Regulation 5(1) and 5(2) of the Takeovers Regulations, for an exemption from complying with the requirement to make a takeover offer for 100 per cent of the NCBA Shares.
"The proposed acquisition of the Offer Shares under the Offer is for the purpose of a strategic investment in a listed company that is tied up with management, capital, enhanced product offerings and other technical support relevant to the business of a company such as NCBA. The structure of the Proposed Transaction will ensure maintenance of domestic shareholding for strategic reasons; and serves the public interest," the notice stated.
However, the bank cautioned that the offer remains conditional and could lapse if key approvals are not secured within stipulated timelines.
"In the event that the CMA Exemption is not obtained by 31 May 2026, the Offer shall become void and the Offer shall be null and void. NCBA Shareholders should exercise caution and seek professional advice before acting," the notice read
If completed, the transaction would hand Nedbank effective control of NCBA while leaving a significant minority stake in public hands.
"Upon completion of the Proposed Transaction, Nedbank will acquire effective control of NCBA Holding Company (Holdings) with the remaining 34 per cent being held by public shareholders on the National Stock Exchange," the notice added.
This comes weeks after NCBA Group issued a cautionary statement to its shareholders and the investing public regarding the proposed transaction.
In a statement on Wednesday, January 21, the bank cautioned that the proposed transaction could materially affect the price of its securities on the Nairobi Securities Exchange.
As such, NCBA Group has urged investors to exercise care when trading in NCBA shares as regulatory processes and shareholder decisions unfold.
"The Tender Offer may have a material effect on the price of NCBA's securities. Accordingly, NCBA shareholders, investors and the public are advised to exercise caution when dealing in NCBA's securities on the Nairobi Securities Exchange," the statement read.
NCBA noted that Nedbank currently has no ownership stake in the group and does not control any of its shares, apart from commitments already secured from certain shareholders.
"Nedbank does not directly or indirectly, either by itself or any related companies or any persons associated with it, own or control any shares in NCBA and, save for the irrevocable undertakings referred to below and received from certain shareholders of NCBA, it does not have an option to acquire any shares in NCBA. Additionally, none of the Directors of Nedbank hold any shares in NCBA," the statement further read.
NCBA also revealed that Nedbank has already obtained binding commitments from shareholders representing a substantial majority of NCBA’s shareholding to accept the tender offer on a pro-rata basis.
"Nedbank has advised NCBA that it has received irrevocable undertakings from shareholders holding in aggregate approximately 71.2 per cent of the ordinary shares in NCBA to accept the Tender Offer in respect of their pro-rata entitlement (and, where applicable, to participate in excess applications), on certain terms and conditions," the statement continued.
NCBA explained that if the tender offer is fully taken up, Nedbank would emerge as the controlling shareholder, while still operating within the limits of Kenya’s takeover regulations.
The bank noted that Nedbank intends to seek regulatory relief from the obligation to make a full takeover offer for all NCBA shares, while maintaining the group’s public listing.
"If the Tender Offer is fully taken up, Nedbank will control approximately 66 per cent in the issued share capital of NCBA, and Nedbank has also indicated an alternative scenario where such shareholding by Nedbank in NCBA may increase but shall not exceed its targeted shareholding by more than 5 per cent, in accordance with the terms of the Tender Offer. The Tender Offer shall trigger the provisions of regulations 3(1) and 4 of the Capital Markets (Take-overs and Mergers) Regulations, 2002 (the Takeover Regulations).
"Nedbank has in the Notice of Intention indicated that it intends to apply to the Capital Markets Authority (the CMA) for an exemption from the requirement to make a take-over offer to acquire the entire issued capital of NCBA pursuant to regulation 5(1) of the Take-over Regulations. Nedbank has further confirmed its intention to maintain NCBA's listing on the Nairobi Securities Exchange following completion of the Tender Offer," the statement noted.
