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Merger and Acquisition

The Divorce of eBay and PayPal

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As far as divorces go, the split-up of eBay and PayPal has been so far a reasonably amicable one. What’s ironic is eBay bought PayPal for $1.5 billion in 2002, while its value today is estimated to be $45 billion. Conversely, eBay is today valued much lower at $30 billion. This has been a large driving force for the merger with active investor Carl Icahn stating “PayPal’s a jewel and eBay is covering up its value.”

eBay’s last quarterly results also seem to back this up showing PayPal’s revenue growing by 20% compared to eBay marketplace down 1%. In the release of final figures for the joint company (Q2) to June 2015 eBay reported earnings of $931 million, or 76 cents per share. This is up considerably from the same period last year which came in at $883 million, or 70 cents a share. However, PayPal’s dominance is obvious, contributing $2.26 billion of eBay’s Q2 revenue. eBay’s marketplace business contributed $2.12 billion to the joint company.

Another reason for the split is that they are both very different businesses operating in different markets. Elon Musk one of the co-founders of PayPal agrees: “It doesn’t make sense that a global payment system is a subsidiary of an auction website. It’s as if Target owned Visa or something.” Separating them will allow each to focus on their own set of unique priorities.

There’s another factor: technology markets change very quickly and a business needs to be responsive to change if they are to survive. PayPal in particular faces new competition with Apple Pay (which allows payments via phone). Apple has shown an ability to make complex technology easy to use for their customers – and they have many millions of dedicated followers. The impact of Apple Pay on PayPal’s business cannot be underestimated.

The benefit to PayPal investors is clear with both Elon Musk and former chief operating officer David Sacks predicting that PayPal could in the near future be worth more than $100 billion. PayPal has already been expanding its business with a series of acquisitions such as Xoom (which transfers funds from America to many developing countries), Paydiant (which helps retailers to operate mobile wallets) and Braintree (which processes transactions for mobile apps). The separation from eBay will put PayPal in a strong position to continue this trend with around $6 billion in cash reserves.

The way forward for eBay seems less certain. Part of the problem today is that its growth was pioneered as being one of the first auction sites. Today it is viewed as an auction site when consumers are tending to prefer a quick online purchase direct from stores. Never mind that 80% of goods on eBay are offered for sale not auction, the perception persists. However, eBay’s a stable investment too. US 85 billion worth of transactions were carried out on eBay last year. It’s hard to imagine that being rivaled by a competitor. Also without PayPal eBay will have more cash to focus on its own bread and butter operations.

All this is likely to benefit investors in both companies. While the saying goes that an entity can be worth more than the sum of its parts, in this case, the reverse is true, the valuation of the two separate companies after spin-off is likely to be greater than their valuation as one.

Is the CEO/Founder of Investors King Limited. A proven foreign exchange research analyst and a published author on Yahoo Finance, Businessinsider, Nasdaq, Entrepreneur.com, Investorplace, and many more. He has over two decades of experience in global financial markets.

Merger and Acquisition

Access Bank Plc to Acquire National Bank of Kenya Limited in Landmark Deal

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Access Bank PLC, a leading financial institution based in Nigeria, has unveiled plans to acquire National Bank of Kenya Limited (NBK) in a landmark deal.

The acquisition announced by Access Holdings Plc, the flagship subsidiary of Access Bank, signifies a significant move in the bank’s African expansion strategy.

Under the binding agreement, Access Bank will acquire the entire issued share capital of NBK from Kenyan-based KCB Group Plc (KCB), which also serves as the holding company of KCB Bank Ltd, Kenya’s largest commercial bank.

This strategic transaction is aimed at repositioning Access Bank as a prominent player in the Kenyan market and establishing it as a regional hub for the East African bloc.

The deal with NBK, known for its strong presence and substantial balance sheet exceeding US$1.1 billion, presents an enticing opportunity for Access Bank to expand its footprint in the East African market.

The completion of the transaction is subject to regulatory approvals from the Central Bank of Nigeria and the Central Bank of Kenya.

Upon finalization, NBK will be integrated with Access Bank Kenya Plc to form an enlarged franchise, advancing Access Bank’s strategic objectives for the Kenyan and East African markets.

Commenting on the Transaction, Ms. Bolaji Agbede, Acting Group Chief Executive Officer of Access Holdings Plc said: “This proposed acquisition marks a significant step in the execution of our five-year strategic plan aimed at positioning the Bank as Africa’s Gateway to the World. The deal with NBK, a historically strong and well-known bank in Kenya with a balance sheet in excess of US$1.1 billion, presents a compelling opportunity to scale up our growth in the East African market. We remain confident that our investments towards diversifying and strengthening the Bank’s long-term earnings profile will deliver significant value for our shareholders, customers, and wider stakeholder groups.”

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Merger and Acquisition

Foreign Investor Eyes 7% Stake in LivingTrust Mortgage Bank Plc

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LivingTrust Mortgage - Investors King

LivingTrust Mortgage Bank Plc is on the brink of a significant financial move as reports indicate a foreign investor’s interest in acquiring a seven percent stake in the institution.

According to industry insiders familiar with the matter, the prospective investor is poised to proceed with the regulatory formalities following the completion of due diligence.

The potential investment is anticipated to provide a substantial capital injection for LivingTrust Mortgage Bank Plc, paving the way for enhanced operational capabilities and strategic growth initiatives.

However, as of the time of reporting, the specifics of the investor and the financial terms of the deal remain undisclosed, pending regulatory filings and approvals.

This development comes on the heels of the recent appointment of Dr. Olumide Adedeji as the new Managing Director of LivingTrust Mortgage Bank Plc, effective March 7, 2024.

Dr. Adedeji, a seasoned finance professional with a wealth of experience garnered from esteemed institutions such as Standard Chartered Bank, FCMB, and Diamond Bank, among others, is poised to steer the bank through this potential transformative phase.

While the transaction awaits official confirmation, industry analysts speculate that the investment could signify a vote of confidence in the bank’s prospects and the broader Nigerian financial landscape.

Furthermore, it underscores the appeal of Nigerian financial institutions to foreign investors seeking strategic opportunities in emerging markets.

The move aligns with LivingTrust Mortgage Bank Plc’s commitment to fortifying its position in the market and unlocking value for its stakeholders amidst a dynamic economic environment.

As the regulatory processes unfold, stakeholders eagerly anticipate the potential implications of this strategic partnership on the bank’s trajectory and the broader financial ecosystem.

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Merger and Acquisition

EnjoyCorp Limited Secures Strategic Acquisition of Champion Breweries Plc

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Champion Breweries

EnjoyCorp Limited, a conglomerate known for its ventures in food, beverage, and hospitality, has successfully secured a strategic acquisition deal with Heineken B.V.

The agreement entails EnjoyCorp acquiring 100% of Heineken’s shareholding in The Raysun Nigeria Company Limited, which holds an 86.5% stake in Champion Breweries Plc, a prominent regional brewer listed on the Nigerian Exchange Limited (NGX).

The transaction, subject to regulatory approvals, is anticipated to conclude in the second quarter of 2024.

Heineken will extend its support to Champion Breweries for a year post-acquisition, ensuring a seamless transition of ownership.

This acquisition marks EnjoyCorp’s strategic entry into the beverage sector, aligning with its vision of catering to the diverse tastes of the African consumer market.

By integrating Champion Breweries as an anchor subsidiary, EnjoyCorp aims to strengthen its foothold in the industry.

EnjoyCorp, known for its mission to enrich life’s moments through quality brands and sustainability, sees this acquisition as a pivotal step in its journey toward transformative growth.

With a focus on innovation and community engagement, EnjoyCorp endeavors to inspire consumers to cherish life’s moments responsibly.

The acquisition underscores EnjoyCorp’s commitment to shaping the future of the beverage industry in Africa.

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