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Merger and Acquisition

Access Bank Backs Off Kenyan Bank Acquisition Deal

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Access Bank has withdrawn its proposal of buying 83.4 percent shareholding in Kenyan Bank, Sidian Bank Limited.

This was made public by Access Holdings who were trading in the transaction as Access Corporation in a filling sent to notify the Nigerian Exchange Limited.

Access Corporation had earlier in June 2022 announced that its flagship subsidiary, Access Bank had reached an agreement to acquire a large chunk of shares worth about $37million held by Centum Investment in the ownership of Sidian Bank.

The filling read “the completion of the proposed transaction was subject to fufillment or waiver of certain conditions before the Long Stop as defined in the agreement. Although regulator have all been supportive in engagements around the transaction, certain conditions precedent needed to prudently complete the transaction have not been met.”

Investors King gathered that Centum’s shares in Sidian Bank had fallen by 2.47 percent in December 2022, the most significant fall in Kenya’s stock market for the year.

Centum had said in their own statement that “the date has passed without all the conditions being fulfilled despite the support of the Central Bank of Kenya, Centum was not able to reach acceptable terms with Access Bank for extension of the share purchase agreement and therefore opted not to pursue extension.”

Access Bank, Nigeria’s biggest lender by assets had planned to double the share of assets outside its home market by 2027 and Kenya’s economy has been predicted to expand at a faster pace than Nigeria’s in coming years.

However, the Bank in its statement said it will continue to pursue its plan to buy more assets in Kenya and the East Africa.

“The bank remains, however, committed to growing its franchise in a safe and sound manner in Kenya and the broader East Africa community and will continue to explore a variety of organic and inorganic opportunities to grow.”

Access Bank had in 2019 acquired 94% of Kenyan lender Transnational Bank Limited.

Merger and Acquisition

Capital One Financial Corp. to Acquire Discover Financial Services in $35 Billion Mega Deal

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Capital One Financial Corp. has announced its intention to acquire Discover Financial Services in a $35 billion deal.

This strategic acquisition positions Capital One as the largest credit card company in the United States by loan volume, intensifying competition with Wall Street’s prominent players.

Under the terms of the agreement, Capital One will purchase Discover at a premium, offering 1.0192 of its own shares for each Discover share—a 26.6% premium based on the closing price on February 16th.

Pending regulatory and shareholder approvals from both entities, the deal is anticipated to conclude in late 2024 or early 2025.

The merger between Capital One and Discover represents the most significant global consolidation this year, surpassing notable acquisitions in various sectors.

By combining forces, Capital One and Discover unite two esteemed consumer-finance brands, effectively eclipsing competitors such as JPMorgan Chase & Co. and Citigroup Inc. in US credit-card loan volume.

This acquisition not only amplifies Capital One’s market share but also grants the company a formidable position within the payment networks sphere.

Capital One’s CEO, Richard Fairbank, described the merger as a “singular opportunity” to establish a robust presence alongside the largest payment networks, underscoring the transformative potential of the deal.

Upon completion, Capital One shareholders will possess approximately 60% ownership of the consolidated entity, with Discover shareholders owning the remaining stake.

The acquisition is expected to yield significant synergies, generating $2.7 billion in pretax benefits.

The strategic rationale behind the acquisition underscores the increasing importance of scale and technological capabilities in the financial sector.

By leveraging Discover’s extensive network and Capital One’s expertise, the combined entity aims to drive innovation and enhance value for customers in an ever-evolving market landscape.

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Merger and Acquisition

Barclays Plc to Acquire Tesco Plc’s Banking Business in £600 Million Deal

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Barclays Plc has announced its acquisition of Tesco Plc’s banking business in a £600 million deal.

The transaction marks Barclays’ endeavor to strengthen its presence in consumer finance and retail banking services across the United Kingdom.

According to the terms of the deal, Barclays will pay approximately £600 million upon the completion of the acquisition.

This includes the acquisition of £4.2 billion worth of credit-card receivables, £4.1 billion in unsecured personal loans, and £6.7 billion in customer deposits from Tesco Bank.

Tesco Plc, in a separate statement, revealed that it anticipates receiving around £1 billion in cash from the sale, considering the release of regulatory capital and an earlier dividend payment by Tesco Bank.

The majority of these funds are slated for a share buyback program, demonstrating Tesco’s strategic financial planning post-sale.

The acquisition, subject to regulatory approvals, is expected to conclude in the latter half of 2024. As part of the agreement, Barclays and Tesco will enter into a 10-year partnership allowing Barclays to utilize the Tesco brand for marketing and distributing credit cards, unsecured personal loans, and deposits.

Barclays’ CEO, C.S. Venkatakrishnan, expressed enthusiasm about the strategic collaboration with the UK’s largest retailer, emphasizing its potential to create new avenues for distributing unsecured lending and deposit products.

While the deal is projected to slightly impact Barclays’ common equity tier 1 ratio, the bank does not anticipate significant alterations in financial returns or shareholder distributions due to the acquisition.

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Merger and Acquisition

Exxon Mobil Corp. to Withdraw from Equatorial Guinea, Ending Decades-Long Oil Presence

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Exxon Mobil Corp., a key player in Equatorial Guinea’s oil sector for almost three decades, has announced its plans to withdraw from the country in the coming months, bringing to an end a significant era in the nation’s oil history.

The decision comes as Exxon Mobil intends to transfer its investments in Equatorial Guinea to the government during the second quarter of the year.

The company explained its commitment to ensuring a safe transition of operations and supporting those affected by the change.

Equatorial Guinea experienced a surge in oil production at the turn of the century, becoming one of the world’s prominent oil provinces following significant discoveries by Mobil Corp. in the mid-1990s. Exxon’s acquisition of Mobil in 1999 further boosted production.

However, over the years, the country’s oil output plummeted by more than 80% due to diminishing reserves and declining foreign investment.

Exxon Mobil’s decision aligns with its long-term strategic objectives, focusing on capitalizing on the most promising opportunities worldwide.

CEO Darren Woods has prioritized investments in regions like Guyana and the US Permian Basin, where growth potential and cost efficiency are more favorable.

The departure underscores the complex dynamics of oil investment, where companies assess risks related to regulatory environments and political stability.

Dr. Ken Medlock of Rice University’s Center for Energy Studies highlighted that escalating risks could prompt companies to seek better opportunities elsewhere.

The exit of Exxon Mobil represents a significant shift for Equatorial Guinea, which has long relied on oil revenue to drive economic growth.

While the country’s oil wealth once bolstered its GDP per capita, challenges remain in addressing social indicators and human rights issues, signaling a transformative period ahead as Equatorial Guinea navigates its post-oil future.

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